Parking

Lord Teverson: asked Her Majesty's Government:
	Whether they will refer to the Office of Fair Trading the practice of car park operators, including local authorities, of using payment machines that do not give change.

Lord Bach: My Lords, the choice of equipment for collecting parking charges is entirely a commercial decision and, thankfully, not a matter for central government.

Lord Teverson: My Lords, I am disappointed by that reply, which is most callous. I remind the Minister that hospitals and local authority operators alone raise some £1.25 billion from parking charges; 10 per cent over-payment means £100 million perhaps wrongly collected. There is a wide range of new technology. Is this not exactly where the OFT ought to get involved? Where else can traders take your money and get away with refusing to give you change?

Lord Bach: My Lords, I repeat that this is not a matter for central government and I am thankful for being able to say so. However, perhaps I can help the noble Lord to this extent: car park operators, whether local authorities or not, should ensure that ticket machines are clearly labelled and that consumers are aware that change will not be given. Failure to do so could lead to a breach under the Consumer Protection from Unfair Trading Regulations 2008, which came into force on 26 May this year, and might be subject to investigation by both trading standards and the Office of Fair Trading.

Baroness Gardner of Parkes: My Lords, is the Minister aware that a very simple solution used internationally is to have a change machine beside the other machine, but that that works only in secure areas? Is he also aware that Westminster Council has been forced to take away coin meters completely in large areas of the city because people have found such skilful ways of robbing them in just a matter of seconds, and it lost a huge amount of revenue due to that?

Lord Bach: My Lords, I was not aware of the noble Baroness's last point, but it does not entirely surprise me. There is a debate about the future of machines of this kind. The future will probably involve credit and debit cards and mobile phone payments being made so that cash is not there to be stolen.

Lord Borrie: My Lords, is there not missing from my noble friend the Minister's Answer the perfectly correct implication from the Question asked by the noble Lord, Lord Teverson, that in many situations the car park operator is a monopolist? In the case of hospitals, you may be miles and miles away from a hospital before you can find another car park. If there is a monopoly, surely any form of exploitation is something that he should be concerned about?

Lord Bach: My Lords, I am grateful to my noble friend. I did not say that I was not concerned about it, but that the matter does not directly affect central government. It was devolved, as it were, in 1986 to local authorities or the National Health Service as appropriate. However, if there is incorrect and unclear labelling, and a failure to do what should be done to ensure that consumers—whether patients at hospitals or others—know about it, there is now some sort of remedy under the regulations passed in 2008.

Lord Razzall: My Lords, I sympathise with the Minister's response that this has nothing to do with central government, but would he nevertheless comment on what seems to be increasingly dictatorial behaviour by a number of local authorities? Time obviously does not permit me to list all such items of behaviour, but the most extreme is the practice of some local authorities of putting microchips in wheelie bins.

Lord Bach: My Lords, I do not think that I would be prepared to comment on that; it would be extremely dangerous. The House prides itself on supporting local authority freedom and objects when central government take too much of it.

Lord Dubs: My Lords, does my noble friend accept that car-parking arrangements at hospitals fall under the Government's responsibilities? Does he agree that it is difficult for people visiting patients, who do not necessarily know for how long they are going to be there if the patients are rather ill? They park their cars, put money into the parking meter and then find they have an enormous surcharge because they have overstayed. Does my noble friend agree that this is real difficulty, and can he make some suggestions?

Lord Bach: My Lords, I agree with my noble friend and I agree with my noble friend Lord Borrie who earlier made the same point. There is a real problem, which should be tackled through the local hospital and the NHS. Of course, the Government eventually have responsibility for that. Today, however, I am pointing out that central government do not have a responsibility for whether or not machines offer change.

Lord Livsey of Talgarth: My Lords, I am sure the Minister will know that hospital car-parking charges have been scrapped in Wales because when the relations of people with serious problems parked their vehicles it cost them a great deal of money to do so. Can special circumstances not be taken into account regarding hospital car parking?

Lord Bach: My Lords, the House obviously feels strongly about this. I shall take the hospital matter back and write to noble Lords on the issue and, perhaps, on a possible way forward. I know from personal experience, as I am sure many noble Lords do, that this is a real issue for people going to hospital and must be looked at.

Baroness McIntosh of Hudnall: My Lords, is my noble friend aware that change machines occasionally do not give change? I recently put £5 into a change machine in a hospital car park and got £3 back. That does not seem to be very good value.

Lord Bach: My Lords, I am aware of that from personal experience, as, I am sure, are many other noble Lords. For central government to step in and say that every machine must be of a certain type would be too much central government.

Human Rights: Same-sex Relationships

Lord Lester of Herne Hill: asked Her Majesty's Government:
	Why they are intervening before the European Court of Human Rights in the case of Horst Schalk and Johann Kopf v Austria (Application No. 30141/04) to contend that same-sex relationships fall outside the ambit of family life for the purposes of Article 8 of the European Convention on Human Rights.

Lord Hunt of Kings Heath: My Lords, the Government have intervened in the case of Schalk and Kopf v Austria primarily to support the proposition that Article 12 of the European Convention on Human Rights does not require same-sex couples to be allowed to marry. The noble Lord has raised an important technical issue about our observations in this case, for which I am grateful and upon which I am reflecting in consultation with my ministerial colleagues.

Lord Lester of Herne Hill: My Lords, I am grateful to hear that Ministers are considering the matter further. I have put the observations in the Library, so that those who want to can see exactly what the Government have said. It is not correct that they have confined their observations only to the right to marry. They have also said that the court should not develop its case law so that same-sex partners living in an enduring family relationship are protected by Articles 8 and 14 of the convention against sexual orientation discrimination in the enjoyment of the fundamental right to respect for family life. I have two questions. First, is that the Government's aim because, if so, it seems bizarre? Secondly, in the light of our law's recognition of civil partnership and recognition that for the purposes of adoption a couple includes two people of the same sex living as partners in an enduring family relationship, why on earth do the Government negatively seek to persuade the Strasbourg court that the convention does not require the creation of legal recognition of such relationships for same-sex couples, who cannot marry?

Lord Hunt of Kings Heath: My Lords, the noble Lord raises important matters and I am sure that all noble Lords will wish to see the memorandum he has placed in the Library. The Government are very proud of the legislation introducing civil partnerships and we strongly encourage other countries to do likewise. However, we do not think it appropriate for other countries—many of which have very different social attitudes towards marriage and relationships—to be compelled to introduce similar systems. That was the principal aim of our intervention. We would be concerned if an interpretation suggested that Article 8 compelled legal registration of any family relationship. However, I assure the noble Lord that we are considering this point very carefully.

EU: French Presidency

Lord Dykes: asked Her Majesty's Government:
	What recent meetings they have held with the Government of France to discuss priorities during the French presidency of the European Union.

Lord Malloch-Brown: My Lords, the UK-France summit in March covered the key issues on the French presidency's agenda. Since then we have continued to work closely together at all levels, from the Prime Minister's meetings with President Sarkozy in Japan this week and Paris last month to numerous phone calls and meetings in London and Paris between Ministers and officials. I visited Paris in June.

Lord Dykes: My Lords, I thank the Minister for that Answer. The ambitious agenda of the French presidency, announced on 30 June, includes CAP reform, an immigration pact, the defence arms agreement and the solidarity agreement—or whatever it may be—on environmental and energy matters. That is a huge agenda. Will it not need to be strongly supported by other member states? What is HMG's reaction to those four key objectives?

Lord Malloch-Brown: My Lords, the noble Lord is correct to say that this is an ambitious agenda. On climate change and energy, President Sarkozy was supported by the other European leaders at the G8 and has already made progress. We strongly support what is being done on the CAP health check, which is intended to get better value for money. The defence work is now proceeding in a good direction, as is migration. This is an ambitious but good agenda, which we hope we can support strongly.

Lord Tomlinson: My Lords, does my noble friend agree that a very useful message to send to President Sarkozy during the French presidency is that it is in everybody's interest that the European Union does less and does it somewhat better? If it really wants to focus on something, that could be the completion of the single market, to which President Sarkozy could make a singular contribution by opening up the French economy to free competition, particularly as regards public utilities.

Lord Malloch-Brown: My Lords, my noble friend is right. I cannot think of any Government for whom the instruction to do less and do it better is not valid. The internal European single market and the Doha round, which is now at the "one minute to midnight" stage, demonstrate that we need a trade breakthrough. The actions taken by France are critical in achieving that.

Lord Waddington: My Lords, should not one of the priorities of the French presidency be to remove the EU ban on the PMOI? Is it not highly improper that the EU should persist in this ban when the original proscription was based on the British proscription alone, which has now been removed, on the order of the Court of Appeal?

Lord Malloch-Brown: My Lords, that is an issue for the Council of Ministers to take up. It is correct that, in the light of the changed British position, it would be appropriate for Europe to revisit that.

Lord Pearson of Rannoch: My Lords, just supposing the treaty of Lisbon is not enacted, given the reticence of the Irish and other member states, can Her Majesty's Government identify any of its new provisions that cannot be enacted under the existing treaties with the support of the court? Will they undertake to veto them if they are nevertheless proposed?

Lord Malloch-Brown: My Lords, the whole House will sympathise with any Minister who says that it is very dangerous to answer hypothetical questions from the noble Lord. We continue to believe that the treaty will proceed. We watch with interest to see what will happen in Ireland. We are now, in the light of the court decision, proceeding towards ratification, and we will have to see what happens.

Lord Howell of Guildford: My Lords, my question is not hypothetical, but I am afraid that it is a bit more technical. The French have talked a lot about climate and energy being their priorities, and it is obvious that they will be distracted by the Lisbon imbroglio to some extent. I notice that the excellent French ambassador, when he appeared before your Lordships' European Union Committee, said that the French intended to press for including nuclear power generation in the category of renewables. That seems a very sensible idea which, if adopted here, would obviate the need to scatter the country with wind pylons, offshore wind plants and so on. Will the Minister confirm that that is our aim as well and that we will agree with the French on including nuclear power in the definition of renewable energy?

Lord Malloch-Brown: My Lords, I wish I could give the noble Lord a categorical answer at this time, but it would be imprudent of me to do so. The Government have made clear our commitment to nuclear energy as part of our energy solution, for just the reason that it is an energy source that does not heavily hit the environment or deplete natural resources. I would resist agreeing to that precise categorisation until I have taken advice.

Baroness Williams of Crosby: My Lords, I am sure that the whole House will welcome President Sarkozy's intention to co-operate much more closely with NATO in the future, which will be a very welcome change for France. Two of the objectives set out in the French presidency conclusion are for a civilian emergency group that could step into some of the terrible global emergencies that we have seen, partly as a result of climate change, and, secondly, for a move towards an EU anti-proliferation plan with regard to weapons of mass destruction. Will the United Kingdom be engaged closely in discussions with France on those two issues, given that it is the only nuclear power in Europe apart from France?

Lord Malloch-Brown: My Lords, I can confirm that we share both objectives. The Prime Minister has made clear in his initiative for international institutional reform his support for a civilian corps of the kind the noble Baroness mentioned. We have always felt that it would be best to do that on a Europe-wide basis. As she knows, on the non-proliferation point we are, with France and others, casting around for a way to renew the non-proliferation treaty and regime. Therefore, the French proposals in this area are intrinsically of interest and are worth supporting.

Lord Berkeley: My Lords, could my noble friend add to the suggestions for President Sarkozy's agenda measures to increase rail freight through the Channel Tunnel? I declare an interest as chairman of the Rail Freight Group. That project was set up by treaty. There are only about five trains going through at the moment, when there are 200 trains' worth of trucks going up the parallel motorway. Action is needed.

Lord Malloch-Brown: My Lords, we will look at that. Described in the way that my noble friend has done, it seems to make obvious sense. I will get back to him in more detail on that.

Lord Hylton: My Lords, taking up the theme of doing old things better, does the Minister agree that a Palestinian Government of national unity or, failing that, at least an interparty negotiating team with Israel would be a very welcome result of the French presidency?

Lord Malloch-Brown: My Lords, I certainly would. This Question ranges quite widely. The quartet, in which Europe is a participant, is the vehicle for raising these ideas. As the noble Lord will know, there are quartet principles about discussions with Hamas, which we have frequently referred to in this House. Those principles remain in place in terms of progress on that issue.

Lord Jenkin of Roding: My Lords, in considering the question by my noble friend Lord Howell of Guildford about whether nuclear power is to be regarded as a renewable energy source, will the Minister take the trouble to consult his former colleague, the noble Lord, Lord Sainsbury of Turville, who, in a debate, said very clearly in response to a question from my noble friend Lady O'Cathain that he regarded nuclear power as a renewable source?

Lord Malloch-Brown: My Lords, I think that I will be able to answer the noble Lords, Lord Howell, in terms that will satisfy both the noble Lord, Lord Jenkin, and him. However, I want to take advice on this before making British policy in an area for which I am not responsible.

Lord Harrison: My Lords, given France's renewed interest in rejoining NATO, and that country's recent White Paper on defence, is it not a propitious time to renew the idea of developing a common defence procurement policy with France and our partners in the European Union? It would strengthen this country's defences, throughout the European Union and, indeed, within NATO.

Lord Malloch-Brown: My Lords, one reason that we are so pleased with the direction of the French proposals on European defence is precisely that they preserve under national command national armies and navies. Earlier fears that somehow there would be a loss of national control have been replaced. It remains a good idea that we combine as a European defence force when NATO was not the right formula. I do not want to go further in terms of the procurement implications, because, again, I am not the right Minister to do that.

Lord Dykes: My Lords, notwithstanding that, are not the Minister's words encouraging of the idea of the joint aircraft carrier for France and Britain?

Lord Malloch-Brown: My Lords, yes; there is good co-operation and we fully understand the need to try to work together on joint projects of this kind.

Lord Lang of Monkton: My Lords, the Minister mentioned trade and the Doha round. Given President Sarkozy's strongly protectionist reputation, would the noble Lord give a commitment that Her Majesty's Government will be robustly proactive in seeking to advance free trade and to succeed in the Doha round?

Lord Malloch-Brown: My Lords, the Prime Minister warned at the G8 summit that the Doha round was at a critical point and there must be progress. France is, after all, part of Europe's common negotiating position on this round, which includes very significant liberalisation of agriculture. We very much hope that the European Commissioner Peter Mandelson will press on to make sure that Europe is part of closing a deal on Doha because of its extraordinary implications for global food prices in the coming years.

Lord Foulkes of Cumnock: My Lords, could my noble friend enlist the support of President Sarkozy to explain to the SNP that, if Scotland became independent, it would not continue as a separate member of the European Union?

Lord Malloch-Brown: My Lords, I know that there have been long and deep connections between France and Scotland and that President Sarkozy would probably welcome such a mandate, but we should probably address this more as a domestic problem and deal with it closer to home.

Lord Ryder of Wensum: My Lords, will the Minister confirm that the Prime Minister will support Commissioner Mandelson in his excellent stand against President Sarkozy during his recent discussions.

Lord Malloch-Brown: My Lords, I am sure that Commissioner Mandelson will be pleased at the expressions of support from, for him, unusual quarters. We all recognise that Peter Mandelson is doing his job, and we of course support him in carrying out the mandate that he has been given by Europe as a whole for a successful conclusion to the Doha round.

Local Government: Roads

Lord Berkeley: asked Her Majesty's Government:
	Whether they will reimburse local authorities for the £671 million cost increases on current road schemes managed by local authorities.

Lord Bassam of Brighton: My Lords, responsibility for developing local major scheme proposals, including preparing robust scheme cost estimates, lies with local authorities. Ministers will consider cost increases for local road and public transport schemes at the appropriate approval stage, in line with the criteria set out in the department's local authority major scheme guidance.

Lord Berkeley: My Lords, I am grateful to my noble friend for that long Answer, but perhaps I could press him to be a little more specific. Surely local authorities tend to underestimate the cost of schemes to make them appear to be better value for money. Surely the only way of making them come up with proper estimates of the outturn cost is to make them carry the extra cost if they run out of budget. Is it not in the Government's interest that local authorities should keep to budget? If they cannot, surely the Treasury has to increase the optimism bias that it uses in appraising schemes to ensure that local authorities stay within the total budget.

Lord Bassam of Brighton: My Lords, very clear guidance is issued to local authorities about schemes that are brought forward through quantified risk assessment. Local authorities also have to produce a sort of risk register for any scheme that they want to take forward. For schemes submitted to the department for programme entry from April 2006, the department now requires local authorities to agree to contribute a minimum of 10 per cent towards the estimated total scheme cost, 50 per cent of any increase up to an approved scheme cost and 100 per cent of any increase above that figure. The incentives are there.

Lord Pearson of Rannoch: My Lords, can the noble Lord confirm or deny what I am sure is an unhelpful rumour that is going the rounds in Eurosceptic circles to the effect that many of the repairs being carried out to our road bridges are in some way influenced or dictated by weight limits imposed from Brussels?

Lord Bassam of Brighton: My Lords, I have a feeling that that fits within the general rubric of being a conspiracy theory.

Lord Bradshaw: My Lords, in answer to that, in fact it was the British Government who agreed to the heavier lorries, although they were well warned about the effects of weight increases. I return to the Question. Is it not the case that many local authorities are trying to blame central government for their lack of money, although that is due to the fact that the authorities do not estimate properly in the first place?

Lord Bassam of Brighton: My Lords, I am reluctant to place the blame on local authorities; there must be a shared responsibility. Of course there are occasions in which a local authority's estimation has been less than rigorous, but we must use the guidance, press on local authorities and help them to develop the capacity so that estimations are more accurate and timely. One sometimes has to accept that there are good reasons for cost overruns in what are ambitious schemes. These things cannot always be seen at the outset of a project.

Lord Faulkner of Worcester: My Lords, does my noble friend accept that the details of a number of road-building schemes have come to light recently as a result of Freedom of Information Act requests to the Department of Transport and that they demonstrate that the cost overruns in a number of cases are almost completely out of control? One example is that of the new crossing of the Mersey, whose cost has risen from £209 million to £390 million. Do not such schemes represent bad value for money and are they not environmentally unsound? Would not the money be better spent on, for example, railway electrification and other public transport provision?

Lord Bassam of Brighton: My Lords, I do not think that this is a question of either/or. Clearly, the schemes must stand on their own merit. I will not get into a debate about the new Mersey Gateway scheme, although I know that there is some concern about the figures produced for it. We must accept that there are many instances in which local major road schemes make a significant contribution to reducing congestion and have a sound environmental base; they were long argued for because of their contribution to local regeneration. We must look at this in the round rather than use a narrow either/or choice between rail electrification and the merits of the road scheme.

Lord Berkeley: My Lords, although my noble friend seems to be taking responsibility for the cost overruns of many of these local authority schemes—I am sure that the local authorities will be pleased about that—the fact remains that local authority schemes and many Highways Agency schemes are running well over their estimated budget costs. I should be grateful if my noble friend could explain what the Government are doing to control the costs of these road schemes, as has happened already in the railway industry.

Lord Bassam of Brighton: My Lords, I set out the formula that is applied and I also explained that there is very clear guidance. We are not taking responsibility for the cost overruns; it is up to local authorities to make absolutely sure that they make accurate estimations when they submit schemes as part of the bidding process.

Earl Ferrers: My Lords, in his original Answer, the Minister referred to a "robust scheme". What is a robust scheme and what is a scheme that is not robust?

Lord Bassam of Brighton: My Lords, perhaps I need to take advice on that from the noble Lord. The process of building up estimations for each part of the scheme has obviously been gone through. Very clear guidance is given on that, and local authorities have to ensure that they conform to the process.

Business

Baroness Royall of Blaisdon: My Lords, with the leave of the House, immediately after the Report stage of the Powers of Entry etc. Bill, my noble friend the Leader of the House will repeat a Statement entitled "G8".

Business of the House: Standing Order 47

Baroness Royall of Blaisdon: My Lords, I beg to move the first Motion on the Order Paper standing in the name of my noble friend the Lord President.
	Moved, That Standing Order 47 (No two stages of a Bill to be taken on one day) be dispensed with on Friday 18 July to allow the Finance Bill and the Consolidated Fund (Appropriation) (No. 2) Bill to be taken through their remaining stages that day.—(Baroness Royall of Blaisdon.)

Lord Higgins: My Lords, why is the wording of this Motion not similar to the wording of the Motion that follows? Is it not presumptuous of the Government to assume that the Finance Bill will receive a Second Reading?

Baroness Royall of Blaisdon: My Lords, as noble Lords know, this is standard procedure for Consolidated Fund Bills and Finance Bills. The stages of Consolidated Fund Bills are always taken formally.

Lord Higgins: My Lords, I understand that, but should it not be worded in the same way as the Motion that follows, which includes the words "in the event of" the Bill being read a second time?

Baroness Royall of Blaisdon: My Lords, as I understand it, the wording is used precisely because of the constitutional nature of the House of Lords in relation to Finance Bills.

On Question, Motion agreed to.

Baroness Royall of Blaisdon: rose to move, That, in the event of the Criminal Evidence (Witness Anonymity) Bill being read a second time, Standing Order 47 (No two stages of a Bill to be taken on one day) be dispensed with on Tuesday 15 July to allow it to be taken through its remaining stages that day.

Baroness Royall of Blaisdon: It may be helpful if I say that the Second Reading of the Criminal Evidence (Witness Anonymity) Bill will be taken today. If this Motion is agreed to, the Committee stage will be taken on Tuesday 15 July, with Report and Third Reading following immediately after the Committee stage. The Public Bill Office is already open for amendments to be tabled for Committee. Amendments received by close of play tomorrow, Friday, will be included in the Marshalled List. I beg to move.
	Moved, That, in the event of the Criminal Evidence (Witness Anonymity) Bill being read a second time, Standing Order 47 (No two stages of a Bill to be taken on one day) be dispensed with on Tuesday 15 July to allow it to be taken through its remaining stages that day.—(Baroness Royall of Blaisdon.)

On Question, Motion agreed to.

Proceeds of Crime Act 2002 (Investigative Powers of Prosecutors in England, Wales and Northern Ireland: Code of Practice) Order 2008

Northern Ireland (Sentences) Act 1998 (Specified Organisations) Order 2008

Maternity and Parental Leave etc. and the Paternity and Adoption Leave (Amendment) Regulations 2008

Baroness Royall of Blaisdon: My Lords, I beg to move the three Motions standing on the Order Paper in the name of my noble friend the Lord President.
	Moved, That the draft orders and regulations be referred to a Grand Committee.—(Baroness Royall of Blaisdon.)

Lord Thomas of Gresford: My Lords, perhaps I may speak to the first Motion concerning the investigative powers of prosecutors in England, Wales and Northern Ireland. The code of practice was not deposited when this matter last came before the House, as I am sure the noble Baroness will be aware. Is there any explanation for that code of practice not having been properly lodged, and is it the Government's practice to bring forward orders of this sort when the documentation that supports them has not been prepared, concluded and lodged at the Table?

Baroness Royall of Blaisdon: My Lords, it is certainly not the usual practice of the Government. I understand that the documents in question have now been lodged. The problem that arose when the SI was first tabled was purely administrative; it was nothing to do with procedure.

On Question, Motions agreed to.

Powers of Entry etc. Bill [HL]

Report received.

G8: 2008 Summit

Baroness Ashton of Upholland: My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister. The Statement is as follows:
	"With your permission, Mr Speaker, I would like to make a Statement on the G8 Summit, which took place under the chairmanship of Prime Minister Fukuda between 7 and 9 July in Toyako, Japan. It was a summit that was unique not just for the range of issues discussed in three interlocking summits—the African outreach, the G8 plus 5 and the major economies summits—but also for the large number of countries—14—whose presidents or prime ministers took part.
	"Let me first draw the House's attention to the unprecedented G8 statement on Zimbabwe. In the face of the deepening tragedy in Zimbabwe—the intimidation, the violation of human rights and the detention of political prisoners—the G8 made clear that we do not accept the legitimacy of the Mugabe Government and that the UN Secretary-General should now appoint a special envoy both to report on human rights and to support regional mediation efforts to bring about change. The G8 also called for the immediate resumption of humanitarian operations essential to prevent further suffering and loss of life, and we resolved that we would take further steps to take financial and other measures against those individuals responsible for the violence.
	"As the House will know, we have followed this up with a UN Security Council resolution now being discussed in New York. We propose an international arms embargo on Zimbabwe, including a ban on all supplies of any arms, weapons, ammunition and military equipment, and we list 14 named members of the Mugabe inner cabal against whom travel and financial sanctions should be imposed by the whole international community.
	"We have now set in train work to identify in Africa, Asia, America and Europe, through a forensic assessment, both physical assets and bank accounts of these 14 people. The UN resolution also establishes a committee to monitor these sanctions. With worldwide sanctions and a worldwide arms embargo, our aim is that there be no hiding place and no safe haven for the criminal cabal that surrounds Mugabe. Now that the G8 has taken its decision, we propose that the United Nations puts the full weight of the international community against the actions of an illegitimate Government.
	"At the heart of the summit's other considerations and conclusions were the triple shocks hurting the world economy: the doubling of oil prices; rising food prices; and, because of the credit crunch, the rising cost of money. They are three shocks that, it is now agreed, cannot be solved by traditional monetary means alone but require direct action that will tackle the sources of oil and food inflation and make for more stable commodity, agricultural and financial markets. The summit also reflected a world that is changing fast, with a consensus about the new economic power of Asia; that oil, commodity and food price rises represent global problems that require global solutions; that there is an economic as well as an environmental imperative to break our dependence upon oil; and that we should act in Africa and on international development for moral reasons, but also because developing countries hold the key to addressing our food shortages and will be the ones most affected by climate change.
	"First, while, as the summit noted, there are many explanations for the doubling of oil prices—the scale of change is now greater than the oil shock of the 1970s—the basic challenge, which cannot be resolved by one country or group of countries alone, is that now and in the future oil demand exceeds oil supply.
	"So while Governments are taking action domestically—Britain with special winter payments for old people, new help for low income families and the current freeze in fuel duty—the G8 agreed that the global conditions for ensuring a more stable international energy market are as follows. First, expanding nuclear power, with the International Energy Agency suggesting that we will need a thousand new nuclear power stations over the next four decades; secondly, accelerating the expansion of renewables; thirdly, radical measures to improve energy efficiency; and, fourthly, co-operation between oil producers and oil consumers to ensure greater understanding of the balance between supply and demand and then new investment in all sources of energy.
	"Britain reported that, for our part, we are following up changes to the North Sea licensing structure with a review of the current fiscal regime with the aim of increasing recovery from new and existing oil fields. In addition, we will be discussing with the President of Nigeria next week how the UK can work with the Nigerian authorities to address security problems in the Nigerian Delta which are costing 1 million barrels of oil a day. We are working with the Iraqi Government to build capacity in the Iraqi oil sector. We are also discussing with Gulf states and others how sovereign wealth funds and oil revenues can be recycled into wider energy investments.
	"Global action to improve energy efficiency and reduce our dependence on oil will not only help reduce energy and fuel bills for households and industry but will help us fight the battle against climate change—essential to the future prosperity and security of the whole world.
	"For the first time, the G8 agreed not just to consider but to adopt, as part of an international agreement, a long-term goal of a cut of at least 50 per cent in greenhouse gas emissions by 2050. For the first time, we also agreed on the need to have interim goals and national plans to achieve them. So I welcome the fact that the major economies group, which includes China, India, Mexico, South Africa, Brazil, Australia, Indonesia and South Korea as well as the G8, agreed to continue to work together in the UN to achieve an international agreement on climate change next year; and that the major emerging economies have agreed to adopt appropriate mitigation actions with a view to reducing their emissions below business as usual.
	"As a measure of our shared commitment to meet these challenging goals, the G8 also agreed to 25 energy efficiency recommendations from the International Energy Agency, including an agreement that each country will put in place car and consumer goods standards—standards that if implemented globally could cut global oil consumption by 15 per cent and energy-related carbon emissions by 20 per cent, equivalent to all the emissions of the USA and Japan combined.
	"As I told the summit, these standards include Britain pressing in the European Union for an average fuel efficiency target of 100 grams of CO2 per kilometre by 2020. My right honourable friend the Secretary of State for Transport is today publishing a consultation paper in support of this target. Britain will also work with countries in the EU and beyond on the scope for commercialising the production of electric, plug-in and hybrid vehicles.
	"To make a reality of, and to monitor higher energy efficiency standards, we will also set up a new G8 energy forum which will meet in the autumn and examine how we can globally adopt new standards and new technologies. This will feed into the next meeting of the consumer-producers dialogue that, following its first meeting in Jeddah, we will convene in London before the end of the year. We will seek to make permanent these initiatives by setting up an international partnership for energy efficiency co-operation as a high-level forum to accelerate the adoption of new technologies and greater energy efficiency.
	"We also know that to adopt alternative energy sources, Africa and developing countries must have greater access to funds. So it has been a British initiative to create what are called the Climate Investment Funds at the World Bank. We agreed measures at the G8 which will now provide over $120 billion in public and private finance for alternative energy and other environmental investments: $117 billion through the existing clean energy investment framework and $6 billion of new funding through the new Climate Investment Funds—a huge new global investment in tackling climate change and in alternatives to fossil fuels.
	"With rising food prices having an impact at home and abroad, particularly for the poorest, the need for co-ordinated global action is clear. So the G8 agreed to invest over $10 billion dollars to meet not just short-term humanitarian needs, including increases in food aid, but to improve food security and agricultural productivity over the longer term.
	"One major element in reducing food prices, as well as generating wider benefits to the global economy, will be a successful outcome of the Doha trade round where lowering trade-distorting subsidies and import restrictions could increase global GDP by as much as €120 billion a year by 2015. The Doha trade round is primarily a development round that will benefit the poorest countries most, but if we are to break the year-long deadlock in negotiations, the upcoming WTO ministerial on 21 July will be critical: a make-or-break meeting about the trade deal.
	"I discussed the importance of this with all participants of the summit, including President Bush and the Presidents of Brazil and South Africa and the Prime Minister of India. We agreed that the biggest signal we could send that the present challenges must not be an excuse for a renewed bout of protectionism was signing a world trade deal. I hope all sections of this House will agree that all countries should show the resolution to achieve the breakthrough we want and need. To support the WTO deal, the G8 also reiterated our commitment to investing $4 billion in Aid for Trade to help poor countries take advantage of the new trading opportunities.
	"As part of this year of action on the millennium development goals, the G8 signed up to new action to meet the goals on health, and reaffirmed commitments made at Gleneagles to provide $25 billion in aid to Africa and $50 billion globally and to establish universal access to AIDS treatments by 2010. How the world achieves further major advances in alleviation of poverty, disease and illiteracy is the subject of the UN Millennium Summit convened by the UN Secretary-General for 25 September.
	"My aim was to turn generalised commitments that were not time-specific into concrete action and delivery to address poverty, disease and illiteracy. We agreed that over the next five years we would deliver the commitment made at Heiligendamm of $60 billion to tackle infectious diseases and to strengthen health in Africa. Some other countries will provide additional resources for health systems.
	"We also agreed to help fund, in 36 African countries, the World Health Organisation target of 2.3 health workers per 1,000 people—in total, an additional 1.5 million new doctors, nurses and health workers, including a substantial increase in the number of skilled midwives so that women no longer have to die unaided in child-birth.
	"The G8 also committed to financing, by 2010, 100 million bed nets for the prevention of malaria, which could save 600,000 lives, and $1 billion of new funding for the education Fast Track Initiative will immediately help a further 10 million children go to school.
	"During the summit, I had a number of key bilateral meetings with other leaders, including the new President of Russia, where we agreed on co-ordinated international action on Iran and the Middle East peace plan. I raised all the major issues between our two countries: our position on the Litvinenko case, the treatment of the British Council and the withdrawal of visas for BP employees.
	"The G8 agreed that in a world of global financial flows it is essential that immediate action to tackle the impact of financial instability at home is accompanied by clearer standards for valuation, changes in the role and use of credit ratings, the better management of liquidity, and, more generally, concerted global action to reform the IMF. There was agreement that the IMF should become a better early warning system for the world economy and that the international institutions set up in the 1940s were in need of fundamental reform to ensure they are fit to meet the challenges of the 21st century. Further work will be done over the coming year to produce proposals for their reform and renewal.
	"Just as on Zimbabwe where we have seen the growth of an international coalition for change, there is growing agreement on the need for detailed collaborative actions on energy, climate change, trade and international development. I commend this Statement to the House".
	My Lords, that concludes the Statement.

Lord Strathclyde: My Lords, I thank the noble Baroness for repeating the Statement. She deserves a medal for her endurance. It is clear from contemplating the menus published in the press that a good time was had by all and, after his strictures about food being wasted in our fridges, I hope that the Prime Minister took a doggy-bag with him. But there is a serious point in all this because we should thank the Japanese people for their exquisite courtesy and hospitality, and whose firm friendship we appreciate so much. Equally, however, I wonder if it is tolerable in the present state of the world that any Government should feel the need to spend £283 million to enable a few selected political leaders to meet. Have we not drifted too far from the original intention of an informal gathering of world leaders to enable them to exchange ideas informally and away from the glare of events? Should we not perhaps go back to something like that? There are already enough gala events on the international merry-go-round with pre-cooked communiqués to justify far more informality.
	Turning to some of the outcomes, I congratulate the Prime Minister on at long last getting Zimbabwe to the top of the G8 agenda. The communiqué says that the G8 does not now recognise the legitimacy of the Zimbabwe Government. Does that mean that the defeated presidential candidate, Mr Mugabe, will no longer be addressed as "President" by the UK Government? There is talk of an arms embargo, but is not even that a little late after Mr Mugabe's arsenal, despite the stand of South African trade unionists, was replenished with Chinese arms? There is also some talk of travel restrictions. If she is able to, can the noble Baroness expand on what these will mean? How many members of the murderous Mugabe clique will now be targeted, and what will be done about the weakness of the UN in allowing Mr Mugabe to attend UN gatherings? Can we be assured that there will be no repeat of the recent shaming events at the Food and Agricultural Organisation conference in Rome? Will there be a UN commission to investigate human rights abuses in Zimbabwe, because talk is poor medicine for that country's woes? Another southern African country cries for action, and it has waited too long for justice.
	On Africa more widely, I ask about the vital issue of access to HIV and AIDS treatment. Last year, when Mr Blair was Prime Minister, he said that the G8 had reiterated,
	"its commitment to delivering universal access to HIV/AIDS treatment by 2010".—[Official Report, Commons, 11/6/07; col. 514.]
	Yet now, with just two years to go, the G8 says that it is merely "working towards the goal" of universal access. Has this vital goal been diluted, because it does not sound to me like a very concrete proposal? No interim targets have been set in the fight against HIV/AIDS, and if one looks at the statements on climate change, one sees that the details are, as is often the case with Mr Brown, not as impressive as the headlines. The emissions target is for "global emissions", not G8 emissions, and it is not clear what the figure for developed countries will be. The target is 42 years away and there are no clear interim targets. The declaration issued by the wider group of economies on Wednesday includes no specific figures at all, so progress since last year has been painfully slow. Did the Prime Minister take the opportunity to explain his policy on motoring, and whether he has yet been able to retract his assurances that the majority of drivers in the United Kingdom would be unaffected by the increase in vehicle excise duty?
	On the world economy, I welcome a reassertion of the importance of globalisation and the breaking down of trade barriers. A renewed commitment is given to the Doha negotiations, but what specific progress can we expect, and when? Is not the unedifying public spat between President Sarkozy and Commissioner Mandelson a matter of some concern? It is worrying if a representative of one of the prime protectionist bodies in world trade is taken to task for being too open. Did the Prime Minister have a bilateral discussion with the President of France to take this up with him, and did he tell him to lay off his friend the commissioner?
	What conclusions were drawn on oil prices, given the Prime Minister's discussions with the Russian President, and on food prices? Do the Government have a view on oil prices? Do they now believe that they will go up or down over the next quarter, and what steps have been taken to reduce food prices? Do the Government believe that there will be a reduction in the year ahead? Do not the Government now regret their negotiating error in giving up Britain's EU rebate before securing reform of the protectionist CAP?
	France and the United States are cutting taxes to boost people's living standards, but Britain has no such freedom. Thanks to the Government's policies we now have the biggest budget deficit not only of G8 countries but of all the 55 large economies except Hungary, Egypt and Pakistan. I doubt that the Prime Minister gave the G8 leaders a lecture over the sushi about no more boom and bust.
	Finally, the G8 expressed concern about Iran's nuclear non-compliance and called on the Iranian Government to act in a more responsible and constructive manner, particularly in the Middle East, Iraq and Afghanistan. How do the Government now assess the responsibility and constructiveness of the salvos of long-range missiles fired off by Iran in the aftermath of the G8? In view of its threats to respond against coalition forces in the event of something that none of us wants to see—a strike by a foreign power on Iranian nuclear facilities—how do the Government assess any potential threat in the coming months?
	At the summit there was unquestionably a lot of talk, which has led to a lot of conclusions. It remains to be seen whether any of this will result in action or benefit to the world, or whether any good at all will come out of it.

Lord McNally: My Lords, I will not follow the noble Lord, Lord Strathclyde, down the path of making cheap remarks about the sushi or the menu and, despite urging from the Benches behind me, I would not dream of making a Heathcliff joke in front of Cathy. But I can speak from personal experience on what the noble Lord said in that I was a spear carrier at the first G6 summit at Rambouillet and the subsequent summits in the 1970s. I remember that Mrs Thatcher—now the noble Baroness, Lady Thatcher—always followed them up by saying that they were talking shops and a waste of time. So, in a way, nothing much has changed, although we all need to take stock.
	When one looks at the immediate post-war world and how the giants at that time responded to the massive problems facing them with such courage, vision and imagination, and even in the 1970s when the oil shock was upon us, one sees that the major economies seemed to have a clear cohesion and sense of purpose. Watching the events in Japan from afar, there was a worry of rabbits caught in headlights and the need for a sense of urgency. It underlines again the problem of whether the machineries set up in the immediate post-war world are now adequate for the challenges, and whether they are sufficient to meet those challenges to allow the G8, like Topsy, to keep on growing and growing. The noble Lord, Lord Strathclyde, is right: those first meetings genuinely were small gatherings—with the Heads of Government and one other sitting around the table talking about the issues—and all the better for it. The meetings are now mega-jamborees that seem to have a momentum all of their own.
	One wonders whether most of the discussions about individual agenda items have the right people there—for example, whether climate change needs Brazil, China and India; whether oil prices need the Saudis; whether Africa needs the South Africans and the Nigerians. Somewhere between the machinery created in the immediate post-war world and the G8, there is an urgent need for reform, but not much sign that that urgency is being acted on. I see the noble Lord, Lord Hannay, in his place; I hope that I am prompting him to intervene later.
	Obviously we welcome the statement on Zimbabwe, but I again echo the noble Lord, Lord Strathclyde: people want to see real and specific action against those named individuals. The City of London has a role to play, as does the EU. It is an affront to see this illegal regime attending international meetings. It is also time for some really candid talk with South Africa about the damage that Zimbabwe is doing to the whole region.
	The bilateral talks with Russia were interesting. There is a lot of machismo in the British press about who wins and who loses in such discussions, but I always recall an old mentor I had in the Foreign Office, Sir Frank Roberts, who used to say that with the Russians you are engaged on all issues at all levels at all times. That is still very good advice even with the new Russia.
	I again have to echo the noble Lord, Lord Strathclyde, who asked about the Doha round. It is a bit wrong that our gallant new hero—as we heard from all parts of the House at Question Time—Commissioner Mandelson, should be going into battle with a feeling that his sword may have been blunted by the President of the EU for the time being. We need that enthusiasm for the Doha round if it is to be carried through.
	Of course we welcome the various and many initiatives listed. For me, they underline some of the debates we had on the Lisbon treaty. Surely this report underlines the fact, if that were needed, that the EU should get on as quickly as possible with the real issues facing the citizens of Europe, rather than being paralysed by constitutional navel-gazing. I hope the Minister will assure us on that.
	I am a little worried about the second to last paragraph in the Statement—that the IMF will be a better early-warning system for the world economy. I have always liked the definition that economists are men trained to predict the past. There is certainly a need for a better early-warning system, but simply to rely on the IMF goes back to the question in my original point about whether the international institutions set up in the 1940s are in need of fundamental reform, and what priority the Government will give to that reform.

Baroness Ashton of Upholland: My Lords, I am grateful to both noble Lords for the advice they have given me throughout their comments. I agree with the noble Lord, Lord Strathclyde, that on behalf of this Government we should thank the Japanese Prime Minister for his hospitality. Whatever may have been written in the press, it is important to recognise the effort that nations put in to ensure that these occasions achieve the best that they can.
	The noble Lord, Lord Strathclyde, questioned the cost of such events, but both noble Lords questioned their relevance. My view is that we need all the different kinds of events: the informal bilaterals, the telephone conversations, the informal talks among world leaders in the margins of meetings, and the formal sessions. Speaking more humbly, I have not even been a spear carrier at these events but I have, as noble Lords know, attended the Peru summit on behalf of the Prime Minister and the European Union Justice and Home Affairs Council. There was never a meeting that I went to, and sometimes I went tired and reluctant, where I did not benefit from the ability to talk face-to-face to someone—often a meeting that took place spontaneously, but which achieved a great deal. We have to make sure that the context in which world leaders are able to discuss issues together is an important one. Events in individual nations prevent leaders, Ministers and politicians doing many things, and without these scheduled meetings it would be much more difficult. I am sure that noble Lords opposite, some of whom played eminent roles when they were in government, will well remember the difficulties of trying to find the time to have this kind of discussion and debate. The point is well made, none the less, that one always has to look at these events in that context.
	Institutional reform is one of the issues that the Prime Minister and the Foreign Secretary have said is important. The IMF needs to become that early warning device. I know that that area was discussed, and it is something the Prime Minister feels strongly that we need to consider.
	I am grateful for the congratulations that were given on getting Zimbabwe to the top of the G8 agenda. We await what will happen in New York. In the Statement I described 14 named people who are part of that inner cabal of the Mugabe "Government", as it were, on whom we are looking to impose travel and financial sanctions. That will be done, as I said, through a forensic assessment of these people's bank accounts and so on.
	I say to the noble Lord, Lord McNally, that the Prime Minister and the other G8 leaders had a frank discussion with President Mbeke at the G8 Africa Outreach session on the first day of the summit. I am sure that many of the points that have been raised today, at Question Time and elsewhere were raised with President Mbeke. We understand the position that noble Lords hold on that.
	With regard to access to HIV treatment, the deadline is 2010, which is not very far away. The tenor of what I was trying to put across in the Statement was that my right honourable friend the Prime Minister was keen to turn dates and rather nebulous commitments into action plans that gave not only interim goals, where that was appropriate, but also the action plans to support them from each country. He will continue to push for that.
	We cannot deal with climate change without working together with all the major global economies. That is being done partly through the Gleneagles dialogue and the Major Economies Meeting. It is important for the G8 to act as a group but within the context of recognising the importance of working together. All these international organisations—the European Union, the G8 and the UN—have a part to play in trying to keep the pressure on ourselves and each other, as well as in finding ways to implement the changes that will be needed.
	With regard to the Doha round, my money is on Commissioner Mandelson. It is important that we continue to put pressure on trying to reach agreement. Without repeating everything I said in the Statement, I hope noble Lords will be assured of our commitment to trying to find a solution to break the deadlock that has been with us for some considerable time.
	There was not a formal bilateral between the Prime Minister and President Sarkozy, but they discussed trade in the margins. The French President has said that he is committed to successful World Trade Organisation talks. We now have to look to what can be achieved in the WTO, but in the firm knowledge that this country will be pushing hard to ensure that we reach the best possible agreement.
	With regard to the link between food production, climate change and poverty, it is important that we recognise that the poorest who are hit hardest by climate change are often hit hardest when they are trying to sustain food crops. We need to consider what food the world has to grow in order to feed all our people. It is important that the Global Partnership for Agriculture and Food, which is not yet in detail but has set itself the vision to bring everyone together to work out precisely how we do that, is an important step in so doing.
	We continue to impress on the Iranian Government the need for transparency in all its nuclear activities. I agree with the noble Lord, Lord McNally, on the importance of the continuing dialogue with Russia. The meeting between the Prime Minister and the Russian President was important. The discussion was helpful, in that everything that could be raised was raised, but I agree that there need to be ongoing dialogues.

Lord Campbell-Savours: My Lords, how can we be assured that the monitoring committee responsible for monitoring the financial sanctions in the case of Rhodesia will be any more effective than the monitoring committee that was responsible for monitoring sanctions against Iraq? That turned out to be utterly useless, as proven in the report of the Volcker commission on the huge and widespread abuse of the sanctions regime?

Baroness Ashton of Upholland: My Lords, on monitoring sanctions, it will be important to pick up what my noble friend has said and look at what has been successful in the past. I do not pretend to have detailed knowledge of which of the sanctions regimes has been the most successful, but it will be very important to make sure that this is an effective method.

Lord Lawson of Blaby: My Lords, the Leader of the House will recall that the Prime Minister's Statement, which she kindly repeated, explicitly said that the accord on cutting back carbon emissions by 50 per cent by 2050 was part of an international agreement. Can she confirm, therefore, that in the absence of such an agreement covering all the major emitters which would have to agree drastic mandatory and enforceable cutbacks of their carbon emissions—which so far China and India have understandably and, in my judgment, quite rightly declined to do—there can be no question of the Government requiring this country to cut back drastically on its carbon emissions, which would cause great damage to our economy, to no conceivable purpose?

Baroness Ashton of Upholland: My Lords, the noble Lord takes a different view from me on the subject and I hesitate to join him in debate at this point. It is important to ensure that in everything we do to protect the environment, we are mindful of our economic needs and our desire to continue strong economic growth. It has always been our view that these desires are not incompatible; the question is to make sure that everything is done efficiently and effectively, not least because of the economic opportunities for the development of alternatives and for renewables.

Lord Hannay of Chiswick: My Lords, will the Leader of the House say a few words about views on the size of this gathering? I refer to the number of countries represented at the meeting, not the number of people who attend, to which the noble Lord, Lord McNally referred. Has not the time come to look again at the limitation to the eight countries which currently go to these meetings? When they were set up in the 1970s, the countries which went represented a very large proportion of the world's economic activity. Doing the same sums now shows that the figure is 15 per cent or 20 per cent lower, and it is going south all the time. Has not the moment come to think about bringing in countries such as China, India, Brazil, and South Africa to this gathering? I am not talking about them coming for just a day or half a day, being politely received, and then going away and saying that they have nothing to do with the conclusions. Since the subjects that are being discussed are subjects to which the agreement of these countries is absolutely necessary, should not they be built into the whole process of preparation? How do we reach conclusions on climate change if we have half an hour with the Chinese President who then goes away and says that he does not want anything to do with it? That surely demonstrates that this is not working very well.
	On Zimbabwe, will the noble Baroness confirm that if there is a mandatory resolution in the Security Council, which I hope very much there will be in the near future, and President Mugabe is one of those whose travel is interdicted, it will override the arrangements which previously allowed him to abuse the generosity of the UN system and come to meetings from which it would have been much better if he had stayed away?

Baroness Ashton of Upholland: My Lords, on the second question, the noble Lord is far better informed on these matters than I am. However, that is certainly my understanding of the position, if we are fortunate enough to achieve what we want at the UN.
	In terms of the G8, I am well aware that there are always discussions about whether the right players are in the room at any debate. There are other countries which are relevant and important when it comes to any of the issues debated at the G8. When any group of countries comes together that tension always exists. That is the case even within the European Union. When its 27 nations are discussing, for example, migration, countries on the border of the European Union have just as much input and are relevant. We should accept the limitations of the groupings that we have. Yes, we should keep them under review—I do not have any information as to whether any proposal to review has been made—but I agree with the noble Lord that it is important to know who else needs to be in the room when those big decisions are made and with whom we need to have dialogue.

Lord Ryder of Wensum: My Lords, in view of the importance which the Government attach to G8 summits, will the Lord President remind us of the main achievements of the G8 summit 2007 during the past 12 months?

Baroness Ashton of Upholland: My Lords, the main achievement of the G8 summits during the past few years has been to try to secure the best-possible dialogue on and understanding of some of the global issues that face the nations involved. I talked about some of them in the Statement, be it climate change, the forces that are disturbing economies around the world and the action that needs to be taken. Achievement comes in two parts: the first is decisions that are made and then implemented—we have mentioned in the Statement moving forward on a number of practical issues, whether it is nets for mosquitoes that will save 600,000 lives or longer-term issues that could make a difference, such as carbon emissions. The second is the fact that the countries come together to continue that dialogue and make headway on some of the bigger issues. It is very rare on the international stage for one to be able to point to a moment of, or one thing that came out of, a particular summit, but when we look back we see that the progress made on a number of issues has been incredibly important.

Lord Crisp: My Lords, the emphasis given in the Statement to health workers in Africa and the need to increase their numbers significantly is extremely important. Health workers need training and education before they can work. As the noble Baroness the Lord President will know, the United Kingdom has an unrivalled track record in medical education and in education of other health workers internationally, particularly in the 37 Commonwealth countries in sub-Saharan Africa. There is an opportunity here for the UK to do something very positive and practical in supporting the training and education of those health workers. Will the Government ensure that the relevant departments of health, international development and universities mobilise the expertise and goodwill that exists to support the education and training that are needed during the next few years to deliver on this promise?

Baroness Ashton of Upholland: My Lords, I pay tribute to the noble Lord's expertise in this matter. The UK Government have sought to try to tackle it, first, by being very practical—the practical propositions that the noble Lord puts forward are very important—and, secondly, by getting government departments to collaborate so that it is not just the Department for International Development trying to tackle these issues. We have sought to build on the opportunities which these issues afford the UK—for example, as the noble Lord has said, through the university system—and on our ability to take our expertise outside. I will certainly feed in the practical suggestion of the noble Lord. It will surprise me if we have not thought that it is a way in which we can help.

Lord Pearson of Rannoch: My Lords, further to the question of the noble Lord, Lord Lawson, and since the Statement takes global warming for granted yet again, perhaps I may ask a question which I have asked previously but which has always been treated with something approaching disdain. Do the Government have a plan B if it turns out that any recent warming of the planet was caused almost entirely by the activity of the sun and very little, if at all, by human CO2 emissions? To gauge how seriously the Government may or may not be taking this new scientific theory, supported by a large and growing number of climate scientists, perhaps I may ask whether they have read the regular articles of the redoubtable Mr Christopher Booker in the Sunday Telegraph, which have given some of the theory's detail? If they have not, will they undertake to do so and meet Mr Booker and his colleagues as appropriate? Of course, I appreciate that fossil fuels are finite and that energy conservation and diversification are in any case good for the soul, but surely policy should change if the planet is cooling down and if humanity is not responsible either way. Could we not at least drop the misguided wind power initiative, about which Mr Booker has also written persuasively? Surely things should change in the Government's Statement and policy if, as even some of the global warmists admit, the planet is likely to cool for at least the next 12 years.

Baroness Ashton of Upholland: My Lords, I have not read the redoubtable Mr Booker and cannot say that I have much inclination to do so at the moment, as I have rather a lot on. However, to answer the noble Lord's point in two ways, first, whatever the situation, helping people to insulate their homes so that their fuel bills fall is a good thing. Secondly, if we have what we currently have—rising oil prices—it is absolutely sensible to consider diversifying the way in which we get our energy.

Lord Elystan-Morgan: My Lords, like so many other noble Lords, I express extreme satisfaction at the fact that the situation in Zimbabwe was given such primacy at the summit and congratulate the leadership shown by the Prime Minister in that regard. However, despite the strongest international condemnation, the situation still remains that de facto Mugabe exercises absolute dictatorial and tyrannical control in that country. Has the time not now come for the United Kingdom to press for a cutting off of foreign exchange that ultimately will bring this regime down and also, indeed, bring the indictment of Mugabe and others of his murderous gang before the bar of international justice? What do the Government estimate are the prospects of such an initiative succeeding in the Security Council and the General Assembly?

Baroness Ashton of Upholland: My Lords, I hesitate to pretend that I have the expertise to give a full assessment of what could happen at the UN. I am grateful to the noble Lord for his comments on the Prime Minister's leadership, with which I concur completely. Within the Statement, we have tried to set out the road that we are going down in the support from the G8, which is now translated to the UN. Noble Lords have discussed with great knowledge and expertise on many occasions the issues in Zimbabwe. I sense and understand the frustration that we all share that we have not made the progress that we would like to make yet. However, all noble Lords will agree that there is no doubt of this Prime Minister's commitment to continuing to find a way of dealing with this.

Lord Elton: My Lords, most of us would endorse the sentiments of the noble Lord, Lord Elystan-Morgan, with regard to the handling of the Zimbabwe issue. On a narrower aspect of its effectiveness, 14 is a surprisingly small number of people. I presume that it cannot include the dependants and spouses of the people listed. It has been suggested that most of them will long ago have transferred most of their wealth to their spouses and dependants, who are freely spending it abroad on their behalf and on their own benefits. Can the proscription, if that is the word, be extended to them? Otherwise, it will not be effective.

Baroness Ashton of Upholland: My Lords, I believe that it is extended to them. As the noble Lord will see in the Statement, when he has the chance to look at it, we describe the forensic work that will go on to try to track bank accounts and so on, precisely to deal with the point that he has rightly raised. In fact, I have just been told that the provision applies just to the individuals, so I apologise for what I have just said because I had understood that it was extended to the families, too. But the work that will go on in tracking into which bank accounts the money has gone, which is described as forensic in the Statement, will be essential to tackle the point that the noble Lord has made.

The Duke of Montrose: My Lords, I thank the noble Baroness for repeating the Statement and for letting us know about the proposal from the G8 to invest $10 billion on improving food security and agricultural productivity. Could she tell the House whether there is a practical programme attached to spending that money and what form it would take? It is all very well for us to say that a successful Doha round will reduce food prices—it might do so in Europe—but for the countries that will benefit from increased trade, it will increase food prices for a large part of the world.

Baroness Ashton of Upholland: My Lords, as I indicated in the Statement, the $10 billion package is meant both to meet the short-term humanitarian needs of which noble Lords will be fully aware and to improve security and output. That will be done through a new partnership which will come together to co-ordinate all of those with a stake in the food crisis, whether they be the consumer or producer.
	With the $10 billion, we shall start by doubling agricultural productivity in Africa over the next few years. That will be important, because it will enable us to use this money to introduce new technologies.

Lord Pearson of Rannoch: My Lords, I apologise for bowling the noble Baroness a ball which does not fall within her department's remit. If she does not have time to read the work of Mr Booker, perhaps the noble Lord, Lord Rooker, could do so—or one of his officials—and meet Mr Booker as appropriate?

Noble Lords: Order!

Baroness Ashton of Upholland: My Lords, the noble Lord can address that question in a note to my noble friend Lord Rooker.

Criminal Evidence (Witness Anonymity) Bill

Lord Hunt of Kings Heath: My Lords, I beg to move that this Bill be now read a second time. As the House will be aware, the need for the Bill stems from the decision of the Appellate Committee of your Lordships' House in the case of Davis. The judgment in that case was delivered just over three weeks ago, on 18 June.
	The use of anonymous evidence is by no means a new phenomenon. It has been used in criminal proceedings now for the best part of two decades. The Davis case itself dates back to 2002, while the earlier case law on anonymous evidence dates back to 1990. When used appropriately, anonymous evidence can play a vital part in bringing serious and violent offenders to justice.
	Prior to 18 June, it was accepted that the courts had common law powers to grant a witness anonymity order where the circumstances of a particular case justified a departure from the general presumption that an accused should know the identity of his or her accusers. The Appellate Committee of this House changed all that when it delivered the judgment in Davis. In short, the Law Lords found that there was not sufficient authority in the common law to support arrangements for the admission of anonymous evidence. The Appellate Committee further held that, on the facts of the Davis case, the use of anonymous evidence did not satisfy the requirements of Article 6 of the European Convention on Human Rights, which guarantees the right to a fair trial.
	However, having reviewed the Strasbourg jurisprudence, the Appellate Committee found that it was open to Parliament to legislate—a point made by the noble and learned Lords, Lord Bingham of Cornhill, Lord Rodger of Earlsferry, Lord Brown of Eaton-under-Heywood and Lord Mance. That is what we are now proposing to do in the Bill. I very much welcome the co-operation we have had from both the Front Benches opposite, and other noble and learned Lords, in helping us to discuss the provisions of the Bill before your Lordships' House at such speed. I fully recognise that the pace at which we are legislating is far from ideal, and that there may be some among your Lordships who remain to be persuaded of the need for emergency legislation.
	The Government's case for taking the Bill through all its stages before the Summer Recess is that, following the Davis judgment, the Crown Prosecution Service has undertaken a trawl of all the live cases it is dealing with to assess how many of them involve the use of anonymous evidence. The results of that research are as follows. As at 25 June, the CPS had identified some 580 cases involving anonymous witnesses. This figure can be broken down into four categories. First, around 290 cases involve test purchases for drugs by undercover officers. Secondly, some 40 further cases involve other undercover operations by law enforcement agents. Thirdly, some 50 cases involve members of the public as witnesses; this figure will be made up of a mixture of cases involving innocent bystanders and those in which the anonymous witness will be associated with the accused in some way. Finally, there are approximately 200 cases where the defendant has either been convicted and awaits sentencing, or the offender has been sentenced and the 28-day period for making an in-time appeal is still running. There will, in addition, be other cases where a conviction was secured some time ago on the basis of anonymous evidence. Many of these cases involve serious offences including murder, attempted murder and terrorism-related offences.
	I stress that these figures have been compiled after an expedited review of current CPS casework and should consequently be viewed as a snapshot of the position and subject to change. However, they give us an indication of the current scale of the problem. Given these numbers, it is the Government's firm view that we now need to act in the public interest, to put the use of anonymous evidence on a firm statutory footing. Delay would mean that a significant number of trials may have to be abandoned and a further large number of convictions could well be overturned on appeal.
	The Bill seeks to place on a statutory footing a power for courts to grant witness anonymity orders in criminal proceedings where this is consistent with the right of a defendant to a fair trial. Clause 1 makes clear that the previous common law rules are abolished. Clause 2 confers power on the courts to make witness anonymity orders in criminal proceedings. It is worth noting that neither the Davis judgment nor the provisions of the Bill impact on the position in respect of civil proceedings. This clause also sets out an indicative list of the special measures that may be taken to protect the identity of a person who is the subject of a witness anonymity order. Clause 3 deals with applications for witnesses anonymity orders. Following an amendment made by the other place, it now expressly provides that every party to the proceedings has an opportunity to be heard on an application for an order.
	The crux of the Bill is to be found in Clauses 4 and 5. Clause 4 sets out the conditions for the making of a witness anonymity order, and Clause 5 sets out the considerations to which the court must have regard when assessing whether the conditions have been met. The Bill sets out three conditions for the making of an order. All three conditions must be satisfied before the judge can make an anonymity order. The first is that the protective measures to be specified in the order are necessary, to protect the safety of the witness or other person, or to protect serious damage to property, or to prevent real harm to the public interest. This latter limb of condition A is intended to cover the sort of undercover operations I have described, where to make known the identity of an undercover officer would put an end to their ability to conduct such operations in future, as well as putting them at risk of reprisal. The second condition, condition B, is that the proposed protective measures would be consistent with a defendant's right to a fair trial. The third, and final, condition, condition C, is that it is necessary to make an order in the interests of justice. As I have said, all three conditions must be satisfied. If it is not possible to make a witness anonymity order without undermining the defendant's right to a fair trial, an order cannot and will not be made.
	To assist the court in deciding an application for an order, Clause 5 sets out an indicative list of considerations to which the judge must have regard in deciding whether to make an order. These include the general right of a defendant in criminal proceedings to know the identity of his or her accuser and, following another amendment made in the other place, whether the evidence to be given by the witness might be the sole or decisive evidence in the case.
	As well as the Bill applying to new criminal proceedings instituted after its enactment, Clauses 10 and 11 also include transitional provisions for existing proceedings and provide a framework for consideration by the Court of Appeal of any appeals against conviction secured on the basis of anonymous evidence. In either case, we want the trial judge or, as the case may be, the appeal court, to consider whether the court could have made the order if the new statutory regime had been in force at that time. If such an order could properly have been made, consistent with the defendant's right to a fair trial, it is right that a trial where anonymous evidence has already been heard should be allowed to continue, or that an appeal against conviction should not be allowed.
	The House will be aware from the front cover of the Bill that I have made a statement of compatibility with the convention rights under Section 19 of the Human Rights Act—as, indeed, did my right honourable friend the Lord Chancellor when the Bill was introduced in the other place. The Explanatory Notes to the Bill include a detailed assessment substantiating this statement of compatibility. I know that the Joint Committee on Human Rights is looking at that matter and has taken evidence on the Bill from the Director of Public Prosecutions.
	The use of anonymous evidence in criminal proceedings self-evidently engages Article 6 of the convention. We believe that the scheme set out in the Bill will enable a trial judge to navigate the difficult legal considerations at stake and reach a view, on the circumstances of the particular case, that it would, or would not, be compliant with Article 6 considerations to grant a witness anonymity order in that instance. In addition to the requirement for a fair trial being set out in the Bill, the court is, of course, required under Section 6 of the Human Rights Act to act in a way which is compatible with convention rights.
	The House will be aware that the Davisjudgment included a comprehensive analysis, by the noble and learned Lord, Lord Mance, of the Strasbourg jurisprudence on the use of anonymous witness evidence. The noble Lord noted that the European Court of Human Rights had repeatedly stated that the use of anonymous evidence is,
	"not under all circumstances incompatible with the Convention".
	Moreover, the noble and learned Lord, Lord Mance, said it is not certain that,
	"there is an absolute requirement that anonymous testimony should not be the sole or decisive evidence".
	We acknowledge that there will be cases, such as Davis,where the use of anonymous evidence, particularly when given by witnesses whose credibility is at issue and where it is the sole evidence, cannot be consistent with a defendant's right to a fair trial. But, equally there will be many others, including those where the credibility of the witness is in dispute, where a witness anonymity order can legitimately be made without compromising the overall fairness of the trial.
	I return to the question of timing. I am reminded, rather more frequently than I care to be, that if one legislates in haste, one can repent at leisure. This House should rightly test the need for emergency legislation of this kind. I have indicated that, in this instance, the Government firmly believe that legislation is needed as a matter of urgency. I welcome the co-operation and constructive comments that we have received from both opposition Front Benches. I, of course, accept that the debate in the other place and the debate we will have in your Lordships' House fall short of the time that should, in an ideal world, be devoted to these very important matters.
	In recognition of that, we have given a firm undertaking to subsume the provisions of this Bill into the Law Reform, Victims and Witnesses Bill, which was announced as part of the draft legislative programme for the coming Session.

Lord Clinton-Davis: My Lords, notwithstanding the sunset provision, if before then it is established that there is innate unfairness, have the Government any plans to review the legislation earlier than is provided in the Bill?

Lord Hunt of Kings Heath: My Lords, one hopes that the Bill is so crafted that innate unfairness will not be evident. Indeed, the remarks that I addressed to the right to a fair trial are very much predicated on that point of view. As I said, we intend to introduce the Bill I mentioned in the next Session. Clearly, if unfairness arose in the way that my noble friend suggested, we would have to consider that in terms of individual cases and any amendments that might need to be made to that Bill. In the other place, probing amendments were tabled in order to inform legislation that might need to be drafted in the future. I am sure that that will be apparent when we analyse the speeches made at Second Reading and in Committee. Following an amendment made in the other place, the Bill now contains a sunset clause, in effect putting our commitment on to a statutory footing.
	The Appellate Committee of this House set us a challenge to devise a statutory scheme for the use of anonymous evidence which is compatible with the right of a defendant to a fair trial. We believe that this Bill fulfils that challenge and I commend it to the House.

Viscount Bledisloe: My Lords, before the noble Lord sits down, could he enlighten me on one point? He referred to evidence being given by serving police officers. Does he contemplate that any serving police officer could come within Clause 4(5) as being somebody who would not testify without an order? Surely a serving police officer has to give evidence if he is required to do so?

Lord Hunt of Kings Heath: My Lords, the cases to which we are referring are described as test purchase cases where the police officers involved need to act under cover. In many circumstances, it is very important that that their anonymity is preserved. However, the general provisions in the Bill, the conditions that will operate and the judgment that the judge will have to make provide the guarantees that the noble Viscount seeks.

Lord Thomas of Gresford: My Lords, I do not think that the noble Lord grasped the significance of the previous question. As the noble Lord pointed out, it is a condition precedent to the order being granted that the witness would not testify if the order were made. The judge has to be satisfied on that. It is not a consideration; it is a requirement. As the noble Viscount pointed out, that seems a bit odd when you look at Clause 4(3)(b), which refers to undercover operatives. Certainly, we on these Benches have no objection to undercover and security people being protected, but obviously they will give evidence if they have to.

Lord Hunt of Kings Heath: My Lords, of course, I am sorry if I misunderstood the point that was raised about the circumstances in which the officers would give evidence.

Lord McCluskey: My Lords, will the Minister kindly explain why the Bill's provisions will not apply in Scotland? Is he able to say whether the Scottish authorities have it in mind to introduce appropriate similar legislation in the Scottish Parliament?

Lord Hunt of Kings Heath: My Lords, it was open to the Scottish authorities to go through the Sewel process. They have chosen not to do so. I understand that the Scottish Administration is considering this matter, but I believe that the Scottish Parliament is in recess. Therefore, it is difficult for me to comment further on that matter. However, if I obtain further information on the Scottish position between now and Tuesday, I shall be happy to give it to the noble and learned Lord.
	Moved, That the Bill be now read a second time.—(Lord Hunt of Kings Heath.)

Lord Goodlad: My Lords, I support the Second Reading of the Bill, subject to our further scrutiny of its provisions next week. Your Lordships' Select Committee on the Constitution has considered the Bill and published its report today. The noble Viscount, who is a member of the committee, has already contributed to the debate.
	The common law of England and Wales, Northern Ireland and Scotland has for many centuries recognised the right for a defendant in a criminal trial to be confronted by his named and identified accusers—that is, witnesses giving sole or decisive evidence pointing to the defendant's guilt—in order that he or she may cross-examine them and challenge their evidence. Clause 5 recognises this, referring to the,
	"general right of a defendant in criminal proceedings to know the identity of a witness in the proceedings".
	In his speech in the Davis case, the noble and learned Lord, Lord Bingham, emphasised the constitutional nature of the long-standing common law right in English law for defendants in criminal trials to be confronted by named and identified accusers. He explained how that right was adopted in the constitutions of the North American colonies and the sixth amendment to the Constitution of the United States of America. He recalled in relation to Northern Ireland how committees chaired by Lord Diplock in 1972 and Lord Gardiner in 1975 conclusively rejected suggestions that witness anonymity might be introduced to deal with the problems of intimidation that existed at that time. The noble and learned Lord, Lord Rodger of Earlsferry, noted:
	"Lord Diplock saw the common law principle as so fundamental that he felt unable even to recommend that legislation should be passed to interfere with it".
	The right to be confronted by named and identified accusers is a right of constitutional character. The Bill, rightly, does not abolish that long-standing right, but it will create a new range of statutory rules permitting witness anonymity. A distinction must be drawn between the general right of a defendant in a criminal trial to be confronted by his accusers and the rules on withholding the identity of witnesses.
	In the Davis case, the Appellate Committee held that, in a small number of recent cases, the common law has been developed to permit a limited qualification on the right to know the identity of the prosecution witnesses in rare and exceptional circumstances where there is a clear case of necessity. The small qualifications to the general rights were developed by the courts exercising their common law power, frequently referred to as their inherent jurisdiction to control their own proceedings.
	The Bill will abolish the,
	"common law rules relating to the power of a court to make an order for securing that the identity of a witness in criminal proceedings is withheld".
	Under Clause 3, either the prosecutor or the defendant may apply to the court for witness anonymity. As the Minister said, Clause 4 requires a trial judge to be satisfied about three conditions before making an order, the details of which he has already recited.
	Although it is not spelt out in the Bill, it is clear that any order made must not violate a defendant's right to a fair trial under Article 6 of the European Convention on Human Rights. The court is a "public authority" for the purpose of the Human Rights Act 1998. In the Davis case, the Appellate Committee held that the combination of anonymity measures imposed by the trial judge in that particular case breached the defendant's convention rights.
	The new statutory rules on witness anonymity introduced by the Bill are broader than the existing common law rules. Whereas the common law powers on witness anonymity are probably limited to protecting personal safety, the Bill will enable anonymity orders to be made where it is necessary to,
	"prevent any serious damage to property, or ... real harm to the public interest".
	That broadening of the rules, along with the existence of a much publicised statutory scheme, may perhaps lead to greater use of witness anonymity, although the Director of Public Prosecutions opined to the contrary in his evidence to the Joint Committee on Human Rights. Article 6 of the ECHR will, however, continue to provide the minimum guarantees of a fair trial. In this context, the House will be aware that the Appellate Committee, in the Davis case, held that the protective measures imposed in that case breached convention rights to a fair trial, as well as the common law limits on anonymity.
	The committee considered that, as a matter of British constitutional practice, there is an acceptable basis for the provision in Clause 11 barring appeals succeeding on the sole ground that a court, before the commencement of the Bill, lacked the legal power to impose an order for witness anonymity. We took the view that the public interest outweighs a defendant's interest in benefiting from a past defect in the trial process, given that there is an express requirement for the Appeal Court to consider whether, overall, the trial was fair.
	We welcomed the introduction of a sunset clause to the Bill and the Government's intention that Parliament will have an opportunity to return to consider witness anonymity in the Law Reform, Victims and Witnesses Bill, which is planned for the next Session. The situation that has arisen in relation to the Criminal Evidence (Witness Anonymity) Bill is likely to recur.
	One of the beneficial outcomes of the Government's decision in July 2007, as part of the Governance of Britain initiative, to publish a draft legislative programme some months ahead of the Queen's Speech is that it is now clear when a Bill in the current Session deals with matters that are planned for the next Session. That is so, for example, in relation to the provisions on coroners in Part 6 of the Counter-Terrorism Bill this Session. The Government have explained that those measures cannot wait until the enactment of the Coroners and Death Certification Bill that is planned for the next Session, as there are a number of pending inquests where new powers are urgently required. The committee therefore saw merit in adopting a general practice of including a sunset clause for provisions that are introduced for reasons of expediency in one Session ahead of a Bill on the same subject that has been announced as part of the draft legislative programme for a subsequent Session.
	The Davis case obliges Parliament to produce a scheme for the provision of anonymous witness orders that meets the requirements for justice in each case and provides fairness under the rule of law. A balance has to be struck between the need to protect witnesses in appropriate cases, so that they can give evidence without realistic fear of the consequences, and the need for defendants to receive a fair trial. I respectfully submit that the Bill strikes that balance and that those in the Government who have produced it so expeditiously deserve our gratitude.

Lord Lester of Herne Hill: My Lords, I, too, support the Second Reading of the Bill. I declare an interest as a member of the Joint Committee on Human Rights. As the Minister said, as part of its scrutiny function, the JCHR took evidence about the human rights implications of the Bill on Tuesday from the Director of Public Prosecutions, Sir Ken Macdonald QC, and from Paddy O'Connor QC, who gave the defence perspective. We will publish that evidence before the remaining stages of the Bill, and we hope to publish a report early next week about the compatibility of the Bill with the convention rights.
	In the absence of a decision of the Joint Committee as a whole, what I am about to say represents my personal view that the Bill is indeed compatible. That accords with the view of the chair of the JCHR, Andrew Dismore MP, as he explained in the Commons debate on 8 July at cols. 1317-19. It also accords with the view expressed by David Howarth MP, on behalf of my party, at cols. 1319-24. One of the remarkable features of the way in which the Bill has been dealt with has been the willingness of everyone from all sides to act consensually.
	We are assisted by the excellent report published on 10 July of the Select Committee on the Constitution, chaired by the noble Lord, Lord Goodlad. We are indebted to the Select Committee for the quality of the report, especially given the speed with which it has had to be prepared.
	There is no doubt about the scale of the problem or the legitimacy of the aim of the Bill in tackling the serious mischief of witness intimidation. The problem is very old, but its scale has increased. The Justice Secretary, the right honourable Jack Straw, was right in saying on 26 June:
	"As long as there has been crime, criminals have sought to intimidate witnesses in order to avoid punishment. Criminal justice systems across the world have sought to deal with this problem. Criminals do not operate by the rules, but the rule of law requires that justice should not only be done, but be seen to be done. The right of a defendant to confront his or her accusers in open court has been a key feature of all systems of justice worthy of that name. That right should be modified only where it is fully justified. In recent years, witness intimidation has become an all too common feature in crimes of a serious nature, especially those involving guns, gangs or drugs. Such is the fear that can be engendered by such criminals that entire communities in an area may be reluctant to come forward to give any evidence about what they know".—[Official Report, Commons, 26/6/08; col. 514.]
	All the judges in the Davis case recognised the reality and serious nature of this problem and that it might well call for the urgent attention of Parliament. They also referred to the New Zealand statutory framework as being of potential relevance.
	In his article in the Guardian on Tuesday, Geoffrey Robertson QC made an intemperate attack on the Bill, under the headline, "There can be no fair trials with this perjurer's charter". He called the Bill,
	"the most serious single assault on liberty in living memory ... which will result in thousands of unfair trials; and the principles of open justice ... will be gutted by a panic-stricken measure that encourages courts, in criminal cases of any kind, to suppress the identity of crucial witnesses".
	I shall not quote the rest of this polemic. It fails to recognise or to grapple with the real problem of witness intimidation. It wrongly claims that the Bill will in effect place the trial process in the hands of the police and that it contains no safeguards for the citizen. The courts will have an obligation imposed by the Human Rights Act and the convention, and the Bill itself, to ensure that everyone has a fair trial in accordance with the procedural safeguards prescribed by Article 6 of the convention, and the Bill will have to be read and given effect to in accordance with those safeguards. The article also suggests that Mr Robertson has not examined the Bill with the care it deserves.
	I declare an interest as a member of the governing council of Justice, which has produced an interesting briefing on the Bill for the House; I have only just read it. Many of the points in the briefing are valuable, but I do not agree with the following comments:
	"We remain of the view that the Bill is misconceived and poorly drafted. In particular, we consider the provisions to be unduly complex, overly broad, contrary to the common law right to confront one's accuser, and lacking several of the safeguards found in the New Zealand legislation on which it was based".
	The last point is perhaps fair and my noble friend may wish to refer to that in his reply, but, with respect, that summary of the position is neither fair nor accurate.
	The Constitution Committee rightly states that:
	"The right to be confronted by named and identified accusers is a right of a constitutional character",
	and that:
	"The Bill does not abolish this long-standing right but it will create a new range of statutory rules permitting witnesses anonymity".
	The committee also points out that Article 6 will continue to provide the minimum guarantees of a fair trial; and, in his evidence to the JCHR, Sir Ken Macdonald emphasised that the courts will be obliged to interpret and apply the new statutory rules in accordance with the fundamental right to a fair trial guaranteed by Article 6.
	I agree with the analysis in the Explanatory Notes that the Bill is compatible with Article 6 and that it contains adequate protection of the right to a fair trial. In particular, Clause 4(4) provides that the court must be satisfied that, having regard to all the circumstances, the taking of the measures granting witness anonymity would be consistent with the defendant's right to a fair trial. That makes it crystal clear that the order must be compliant with Article 6. In addition, when deciding whether to make an order, the court must have regard to any concerns about the credibility of the witness and the extent to which the evidence given by the witness could be properly tested.
	Provision is also made for ongoing and appeal cases where an order has already been made. The court must consider whether the order could have been made under the new statutory rules and whether the effect of the order is that the defendant has been prevented from receiving a fair trial. If so, the court will bring the trial to an end or treat the conviction as unsafe. Finally, the judge must give a warning to the jury to ensure that the order does not prejudice the defendant.
	I welcome the fact that the Bill was amended in the other place to include as a relevant consideration,
	"whether evidence given by the witness might be the sole or decisive evidence implicating the defendant".
	The DPP suggested in his evidence to the JCHR that there might be rare and exceptional cases where it would not be unfair to use such anonymous evidence—for example, where an elderly and vulnerable witness identified the registration number of a car used in a bank raid and was terrified, on reasonable grounds, of what would happen if her identity were revealed. It is unclear, as the noble and learned Lord, Lord Mance, indicated, under the current Strasbourg case law whether this would breach Article 6, but the amendment made in the other place will make it less likely that there will be a violation of the right to a fair trial.
	Indeed, one of the points made to the JCHR by Sir Ken Macdonald was that he expected that there would be fewer cases than at present when anonymous evidence would be admitted at trial. The undercover cases would be largely unaffected but in Operation Trident cases the criminality of witnesses means that it may not be possible to prosecute them at all. The DPP told us that the process provided by the Bill would throw up cases where credibility would be an issue, particularly as both judge and any appeal court would know the identity of the witness concerned.
	The addition of a sunset clause is also most welcome. The Bill has been described by Ministers as a stop-gap, and the Justice Minister has made it clear that further legislation will be introduced next Session that will subsume the contents of this Bill and enable full parliamentary scrutiny. The Minister confirmed that today. The Constitution Committee observed:
	"While we accept that from time to time exceptional circumstances may arise requiring the Government to prepare, and Parliament to deliberate on, a bill according to an expedited timetable there are obvious risks, especially where the bill deals with a complex social and legal problem".
	The Justice Secretary's undertaking should meet that concern on this occasion.
	The Bill specifies that an order can be made only when necessary to protect the safety of a witness or another person or to prevent any serious damage to property, or to prevent real harm to the public interest. The reference to "serious damage to property" is controversial. It is unlikely that the protection of property rights could ever outweigh the right of the accused to a fair trial and, except in the most exceptional cases, it should not be a reason for an anonymity order. The DPP gave as an example a case where there was a credible threat to torch a warehouse or a witness's home and where the test of necessity was met.
	The Bill makes no provision for special advocates at hearings to determine applications for witness anonymity orders. The New Zealand legislation provides for the judge to appoint independent counsel to assist him when considering an application for a witness anonymity order, including whether the safety of the witness is likely to be endangered if his identity is disclosed. The Crown Court has an inherent power to appoint special advocates, but the magistrates' courts would need specific statutory authority to do so. It is questionable whether magistrates' courts should be included in the Bill at all. There is, in any event, a need for a proper procedural framework, as happens with the Special Immigration Appeals Commission, covering how the special advocate procedure should operate. I gather that the DPP, in answer to our questions, was sympathetic to that view.
	As I have said, the Justice Secretary gave an undertaking in the other place to give active and urgent consideration as to whether a scheme of special advocates is feasible and necessary, before the introduction of the law reform, victims and witnesses Bill in the next Session. He also undertook that he would in the meanwhile indicate to the judiciary that they should consider, in light of cases that come before them, whether independent counsel would be of use. That Bill will enable Parliament to judge whether the new scheme works well and in the interests of justice. In my view, it will be in the interests of justice and the effective protection of the right to a fair trial if this Bill, in the light of experience, is reviewed and properly considered.

Lord Grabiner: My Lords, it is always a great pleasure to follow the noble Lord, Lord Lester. It is a particularly pleasurable experience today because I find myself in complete agreement with everything that he has said, not least about the rather silly piece in the Guardian last week.
	Two key points come out of the Law Lords' decision in the Davis case. First, they decided that the common law should not be used by judges to develop inroads into established areas of our criminal law; in that case, it involves the right of a defendant in a criminal trial—I quote the noble and learned Lord, Lord Bingham, the senior Law Lord—to,
	"be confronted by his accusers in order that he may cross-examine them and challenge their evidence".
	The Judicial Committee was concerned that, in a series of cases at and below Court of Appeal level, that common law principle had been undermined by the inventive creativity of judges. I must confess some sympathy for that position. On the whole, it is usually better for our democracy if judges exercise some self-restraint and confine themselves to interpreting the law rather than inventing it. That is the first key point in the Davis case.
	The second point is that the Law Lords took the view that the deficiencies of the common law in this area would be best addressed by the legislature. The noble and learned Lord, Lord Mance, said that the rule,
	"is one for Parliament to endorse and delimit and not for the courts to create. Parliamentary legislation is the means by which common law principles regarding the admission of documentary evidence have been modified, and it is also the way in which New Zealand and Netherlands law were altered to meet the undoubted—and there is reason to think growing"—
	I emphasise that phrase—
	"threat to the administration of justice posed by witness intimidation".
	For the present purposes, the point of the noble and learned Lord, Lord Mance, about the prevalence of witness intimidation is key.
	You get a real flavour of the seriousness of this problem if you look back at the judgment of the Court of Appeal, delivered by our most senior criminal lawyer, Sir Igor Judge—who deserves some congratulation because it has just been announced that he will be the next Lord Chief Justice, with effect from, I think, October—in which the rather shocking truth is laid bare. He describes what he calls the,
	"compelling evidence of an alarming increase in gun-related crime",
	including shooting incidents on the streets of Nottingham in a 10-month period in 2002-03, when 37 people were injured. Regrettably, we are also familiar with serious knife and gun crime in cities across the country, virtually daily. Sir Igor drew attention to fear on the part of witnesses to come forward—fear for their lives and the lives of friends and family. As he rightly said:
	"Without witnesses, justice cannot be done".
	It is important to understand that the Law Lords were not saying that legislation in this area would be incompatible with our obligations under Article 6 of the convention. On the contrary, they took the view that legislation was the appropriate way forward so long as the devised structure produced a fair trial for the accused. On this point I am sure that we are all agreed. So the essential question is whether the proposed legislation contains suitable safeguards that will ensure a fair trial for the accused.
	The structure of the approach adopted in the Bill is that it will be a matter for the judge to decide whether or not to make an order for anonymity in respect of any witness. That is obviously right in principle. The judge is best placed to apply the criteria identified in the Bill. The test is one of "necessity" in Clause 4(3), having regard to the fears of the witness or, as the case may be, the prevention of real harm to the public interest. Before making the order, the judge will also have to be satisfied that the defendant will get a fair trial and that the interests of justice will necessarily be served.
	I do not think that the need for this legislation can seriously be doubted. The noble and learned Lord, Lord Carswell, another of the Law Lords, drew attention to Ministry of Justice statistics that reveal a doubling of convictions for witness intimidation between 1996 and 2005. This is an urgent problem that needs to be dealt with firmly.
	There is also danger in delay. The Minister mentioned the substantial number of cases in the pipeline. Obviously, that is a reason for getting on with this speedily. There is another problem. As the law currently stands, the viciously motivated criminal has a considerable incentive to intimidate witnesses in the knowledge that if he is successful in that endeavour, no case will be made against him because there is no provision in law for witness anonymity. That must be put right, and it must be put right speedily.

Lord Elystan-Morgan: My Lords, I wholeheartedly agree with all noble Lords who have spoken that this is a case that cries out for legislation. The administration of justice will not be the same after 18 June, when the decision in R v Davis was given by the Appellate Committee of this House.
	I appreciate that the House is dealing with a number of problems that are conjoined, but they are fundamentally different in many respects. In the first instance, one is seeking to repair an infection in so far as the common law is concerned. To my mind, that infection was brought about by creeping erosion, step by step, without anyone appreciating that one was doing anything fundamentally wrong. Secondly, one is not just repairing an infection; one is also seeking to repair an injustice. We must always bear that in mind. If we did nothing more than repeat into statute the principles that had been applied in the common law over the past 20 years, we would be doing the community and the whole principle of justice a very considerable injustice. We are mindful of the fact that everything that we do must fit somewhere within the Strasbourg principles; otherwise, our time here would be wasted—this matter would merely be struck down in the near future.
	At all times, one is conscious of the fact that one is dealing with a massive problem of threat and intimidation to witnesses. It is not a new problem; it is one of the oldest problems in relation to the administration of justice that the world has known. In an article on this matter some years ago, Mr David Pannick QC quoted the words of Cicero when he prosecuted Gaius Verres, the former consul-general of Sicily, in 70 BC. He complained of the fact that practically all of the available witnesses had been intimidated. It is a problem that civilised societies have had to live with. It was faced in the Diplock report and the Gardiner report thereafter; it was faced earlier in relation to the Kray and Richardson trials in this country. One must not assume that the only possible answer lies in the path that we are considering, although that path is important. Perhaps I should say that that course is important—it is somewhere between Charybdis and Scylla. One can break justice, whether it be on the rock or in the whirlpool—I cannot now remember which was which. There must be a steady and careful course between those two extremes.
	On the question of when this should be done, I well appreciate the views expressed by many distinguished people that Parliament should pause, tarry, consider and reflect for some time before taking any action. I do not think that we have such time available to us. The gravity of the situation is such that uncertainty and confusion have been created—I refer to the many trials already commenced where an order has been made for witness anonymity and the many scores of trials in which a conviction is undoubtedly soon going to be challenged in the Court of Appeal. All such considerations—possibly in hundreds of applications—are now waiting to be heard in relation to whether anonymity should be granted. To my mind, all those circumstances determine that there should be swift action. Nevertheless, as quoted by the Lord Chancellor in the other place, the words of Lord Denning ring loud, gravely and clear:
	"In the very pursuit of justice, our keenness may outrun our sureness and we may trip and fall".
	That splendid man spoke wise and timeless verities.
	I am fortified by the fact that there is now a sunset clause that will, in any event, bring this legislation to an end in some 18 months' time. However, I suspect that the sunset will not be the one contained in Clause 14 but the one that will come with the passing of the Law Reform, Victims and Witnesses Bill. I very much hope that in the mean time we consider not just exactly how one should deal with that as a matter of mechanics but the fundamental principles, which have still not been properly and fully considered, nor catered for, in this legislation. The legislation is imperfect and, in my view, the imperfection is as follows.
	In the period before Davis, a judge would have to consider practically all the considerations set out in Clauses 4 and 5 and the other parts of the Bill. What learned judge would avoid any of those? However, if all you do is convert clear judicial discipline into nothing more than a statutory checklist, what do you achieve so far as concerns safeguarding the fairness of a trial? It seems to me that the real problem is not the question of the headings that the learned judge had to consider and give particular attention to one by one but the question of what information he has on which to act in relation to those determinations. In other words, the Bill does not give the judge the wherewithal to answer those questions.
	It seems to me that in future a judge will rely very much on the ipse dixit of the police and the prosecution. In the long term—and, I hope, in the much shorter term if we are to amend this in the legislation that will come before the House in a few months' time—the answer must surely be to give the judge the wherewithal to be informed fully about the features that are crucial to the determinations, and I believe that that can be done only through the appointment of a special counsel or special advocate. I appreciate that it is argued that it is already possible for that to be done under a judge's inherent powers. I do not have the exact passage from Archbold's Criminal Pleading, Evidence and Practice, but I am told that the learned editors of Archbold currently say, "Yes, but it should be sparingly used". In order to remove all doubt, therefore, I would very much welcome a statement in the Bill that a special counsel can be appointed.
	It may be that the procedure in relation to the magistrates' court can somehow be made more efficient, but at the moment I cannot think of any better way of doing it than by an application to the Attorney-General. The special counsel would not act by himself; there should be a team of independent researchers and persons who are in a position to carry out the most detailed and sensitive inquiry so as to be able to lay before the judge information that is relevant to these crucial matters; otherwise, judges will be guessing or accepting the ipse dixit of the police and the prosecutor. I understand that that is how this system works in New Zealand and how it largely works in the Netherlands. When the matter eventually comes before us again, in a few months' time with the fresh Bill, I very much hope that some thought will have been given to the prospect of making a declaration in that Bill that witness anonymity should be regarded as the exception rather than the rule; otherwise, there will again be the danger of the same creeping erosion in the interpretation of statute as occurred with the common law.
	I hope, too, that one will always bear in mind the Strasbourg jurisdiction. The Strasbourg cat can jump either way. As I understand it, Strasbourg has not yet given a final, definitive determination in relation to this matter. Until that happens, there will always be a concurrent danger and possibility that our efforts here will be rendered wholly nugatory. Therefore, there has to be a measure of protection in relation to Strasbourg. From what was said in R v Davis, it seems to me that we are in some sort of purgatory. The noble and learned Law Lords say, "We are not able to say that Strasbourg is compatible, but, with the state of Strasbourg law at the moment, we are not able to say that it is incompatible". Somewhere there is an unhappy and uncertain purgatory between us.

Lord Marlesford: My Lords, it is obviously with great trepidation that a lay man such as me ventures into an area of the law as esoteric as this, especially as most of the other speakers in this debate are high-powered lawyers. I do so first and foremost because I find the whole concept of anonymous accusation in a court of law to be deeply repugnant. I shall cite again, because it cannot be cited too often, the words of the noble and learned Lord, Lord Bingham, in his judgment on the Davis case. He said that,
	"the defendant in a criminal trial should be confronted by his accusers in order that he may cross-examine them and challenge their evidence".
	I have been much assisted by an article in this week's Spectator by the noble and learned Lord, Lord Lloyd of Berwick. I felt that his summary of the situation was itself a masterly judgment. Perhaps I may quote a little piece from it:
	"The Law Lords reaffirmed the long-established principle of the common law that in a criminal trial the defendant should be confronted by his accusers. Any conviction which depended wholly, or to a decisive extent, on the evidence of anonymous witnesses could not be safe. Accordingly they quashed the conviction. The reaction of the police was predictable. John Yates, assistant commissioner of the Met, described the decision as a cause for grave concern. Bob Quick, the head of counter-terrorism, said that the implications were catastrophic".
	He quotes Mr Quick as saying:
	"There is too much principle in the criminal justice system, and not enough pragmatism".
	The noble and learned Lord, Lord Lloyd, goes on to say that,
	"the Lord Chancellor said that legislation was necessary to cure what he called 'a technical defect in the law which has been until now unidentified and unsuspected'. This is a travesty of what the Law Lords decided".
	He says that Mr Straw,
	"further argued that 'in recent years witness intimidation has become all too common'. Can he have forgotten the 30 years of terrorism in Northern Ireland where witness intimidation was always a very real problem?".
	To me, as an amateur and outsider, that is a very helpful explanation of the situation that we face.
	Perhaps I may say one other thing in relation to Northern Ireland. I believe that the main political reason why successive Northern Ireland Secretaries rejected the use of anonymous witnesses was that it would have provided grist to the mill for those espousing the terrorist cause, which they sought to justify by depicting the Government of the UK as repressive.
	My second reason for speaking is that this rushed legislation has been brought forward as a result of public pressure from the police, who have suggested that without it the streets of Britain will soon be flooded with liberated murderers whose convictions have been quashed. That suggestion has been communicated to the public by the ever ready tabloids, for which it provides a useful alternative to their usual junk diet of "Big Brother". I regret that my own party should appear to have connived so easily in the whole exercise and I am surprised that the Liberal Democrats should have done the same.
	The next reason for my intervention is that over the years, not least as a member of EU Sub-Committee F, which deals with home afairs—we are at present looking at Europol—I have become deeply sceptical of some of the judgments and practices of the police and even more of the ability of the Home Office to control them. There have already been many references to the Strasbourg court. I would have thought that this is a problem that could usefully be looked at on a European basis so that, if there is to be witness anonymity, there can be an agreement in Europe to ensure that we have some form of common—

Lord Lester of Herne Hill: My Lords, I do not know whether the noble Lord is aware that the first problem about the European Court of Human Rights dealing with this is that most of the judges come from inquisitorial rather than accusatorial systems, yet the convention requires an accusatorial system. The second problem is that they do not regard it as within their function to dictate the detailed rules of procedure and evidence. The overriding requirement, as the Law Lords made clear and as the Bill and the Human Rights Act make clear, is to ensure a fair trial. If that is the overriding requirement, I do not think that the Liberal Democrats, the Government or the Conservative Party can be criticised for not welcoming the Bill.

Lord Marlesford: My Lords, I am grateful to the noble Lord for his learned view.
	There may well be circumstances already provided for by the common law where there should be witness anonymity, but we are in this situation today because the common law provision has been abused and has been rightly and successfully challenged in Davis. In what way has it been abused? I believe that the answer is the gay abandon with which the police have come to use the promise of anonymity in persuading witnesses to come forward. Far from always having been carefully considered judicial decisions, the deals with the witnesses were done by the police and then virtually presented as faits accomplis to the court.

Lord Grabiner: My Lords, with great respect, I do not think it right to say that it has been a matter purely for police discretion. In order to secure some form of anonymity order under the common law approach, until the Davis case, it was still necessary to secure agreement from the judge.

Lord Marlesford: My Lords, I realise that, but I suspect that when the police have effectively done a deal and said to a witness, "Don't worry, we'll ensure that you don't have to appear", and then have said to the judge, "This is crucial evidence and we've already assured him", the judge would find it more difficult to reject the application for anonymity.
	How are we to proceed if this Bill becomes law? There are detailed and sensible conditions set out for the use of anonymous evidence, but how is the defence to be able to argue against such decisions before they are made? Will the consideration be seen as fair? That problem also applies under the existing common law system, but it has been somehow more accepted.
	I also object to the retrospective nature of this legislation. Retrospective legislation is seldom, if ever, justified. It is itself a potential instrument of tyranny. Clause 11 prevents an appeal solely on the grounds of witness anonymity under Davis and instead requires the court to consider whether the anonymity order could have been made under the new law. I suggest that in many cases that is an impossible task when the full details of the original circumstances can no longer be established and thus considered. I would much rather remove this retrospective element and let appeals from the past take their chance under the common law, so that judges simply have to decide whether the anonymity had prevented a fair trial, as they so decided in Davis.
	Indeed, I would much prefer that we did not pass the Bill and that we continued under the common law with the police from now on being conscious of the shadow of Davis in pursuing their investigations and suggesting to witnesses that they need not go near a court. Noble Lords will remember that 15th-century cities such as Venice and Florence had little letter boxes, normally in the form of an open-mouthed gargoyle, into which citizens could post anonymous denunciations. Equally in France citizens could be imprisoned on lettres de cachet for raisons d'�tat. That has, thank goodness, seldom been the English way.
	I recognise that the promise of anonymity makes it easier for the police to get a conviction, but that is not the point. The point is very simple: the accused should get a fair trial. That is the principle that we should be defending and which I, as a mere lay man, feel fully qualified to advocate.

Baroness Mallalieu: My Lords, for the first time in the debate, the noble Lord, Lord Marlesford, has put a finger on the nub of this matter. We are being asked to pass a deeply troubling piece of legislation at enormous speed and, because of the political pressures on all three political parties, there has been an agreement that the Bill, with very little amendment, will reach the statue book next week.
	I have been a practising criminal barrister for 38 years, both prosecuting and defending, and I believe that the best way of getting at the truth in a criminal trial is to allow the accused to confront his accusers directly and in public and to cross-examine and challenge them knowing who they are and where they come from. I instinctively dislike this proposal. Time and again in the past 10 years, when criminal justice legislation has been through both Houses of Parliament, I have gone down to the Old Bailey and have been besieged by people saying to me, How did you allow that to happen?. I have no doubt that it will happen in relation to the Bill, but on this occasion all I will be able to say is that no one was brave enough to stand up and say that this principle is more important than immediate practical considerations.
	We have been down this route before, albeit some time ago. We have given anonymous and secret evidence a whirl in the past. We did it with the Court of Star Chamber and in trials for treason. While those procedures were initially very popular, they came to be regarded as cruel, unfair and oppressive, because they resulted in wrong convictions. They were eventually abolished by the Long Parliament in 1641. Perhaps they will not last as long in this case, but I fear that history often repeats itself.
	I do not for one moment suggest that there are not very serious problems with witness intimidation, which one hears about every day in the criminal courts. I was interested in the figures given by my noble friend the Minister. It was the first time that I had taken them in. The Bill has been presented to the public as legislation primarily intended to protect the innocent bystander or the brave witness who comes forward as a member of the public. However, the reality is that the bulk of the 580 cases330 of themrelate to providing protection for the prosecuting authorities. That may be the perfectly proper thing to do, but the reality is that only 50 cases in the pipeline involve members of the public, although that was the basis on which the Bill was effectively sold.
	There is a problem; it is probably a growing problem, but there have always been problems. It is encouraging that convictions for witness intimidation have doubled, as my noble friend Lord Grabiner said, in the past 10 years. Frankly, however, we have to face up to the truth behind this Bill and the future Bill that we will be asked to consider. Changing the rules in criminal trials will not solve the problem of witnesses or potential witnesses who are afraid to give information or evidence. We need to look at the social conditions that cause that problem. We need to look at other and better ways in which people can be encouraged to come forward to assist the police against crime and we need to look at our current ways of protecting people who are brave enough to do so. We need to do that in proper depth, as I very much hope that we will in the next Session. However, this Bill is an attempt to validate retrospectively those 580 cases in which it seems, as a result of Davis, that unlawful orders have been made.
	The judgment of noble and learned Lords in the case of Davis was attacked in the tabloid press in a disgraceful way by people who I have no doubt had not troubled to read it. The judgment was a careful and balanced analysis of the problems. It is clear that the general rule is being breached in the courts, as judges have been making decisions on anonymity as they think right with no statutory basis or consistency. What the Law Lords were saying in that judgment was effectively that either Parliament must say, This is not to happen, or it must provide statutory guidance. I would have chosen the former, but each of the three main political parties, no doubt under considerable public pressure, has chosen the latter. As a result, we have this Bill, which will, no doubt, reach the statute book. Those of us who disagree with its fundamental principle have to make the best of it.
	With that in mind, a number of short points need to be made by someone who comes to the debate as a practitioner. The first has not yet been mentioned, but it is important that it should be. We still have the presumption of innocence in this country. That is non-negotiable. It is the mark of a free and civilised society and, if it goes, so does liberty. When a judge comes to look at one of these applications, I hope that he will look at it not from the point of view referred to by my noble friend Lord Grabiner, of the viciously motivated criminal, but from the point of view of someone on trial who is at that time innocent and may have been wrongly accused. That is the basis on which we should all start looking at legislation of this sort.
	The second principleeveryone has referred to itis that the trial must be fair. Not only is an unfair trial a breach of Article 6, but unfair trials lead to miscarriages of justice, which, in turn, are horrendous for the individual concerned and undermine respect for the law. Also, what is the point of our paying to keep innocent people in prison when the criminals responsible remain free? There will be many cases in which a fair trial is simply not possible if witness anonymity is granted. I welcome the provisions in the Bill that allow the 560 cases in the pipeline to be looked at again, because a number of them may be ones where the orders currently made cannot stand.
	For my partI hope that this will be clarified in case law as soon as possibleI very much doubt that a case where the only or decisive evidence against an accused is given by an anonymous witness can amount to a fair trial, either under Article 6 or as a matter of plain common sense. For a defence counsel, defending in a case like that is effectively being made to punch into thin air. You are not allowed to know who the witness is and you are not allowed to ask any questions that might lead to disclosure of the identity. How on earth do you begin to tackle the credibility of a witness whose account your client tells you is wrong?
	If we are to have anonymous witnesses, as we will from next week, it is right that Parliament should provide a framework for the trial judge. I stress that it must be a judge; this must be reserved for serious cases. I hope that we are not going to go down the route of the magistrates' courts employing this sort of order. At the moment, the Bill is silent on that, but it is one of the very important details that must be looked at. We should not even contemplate that decision being taken at magistrates' court level.
	A number of things seem to me to be necessary at the very least. First, the judge must know the true identity of the witness. There is nothing in the Bill to ensure that he is told. Surely that must be put right by amendment next week. Secondly, defence counsel must not be prevented from seeing and hearing the witness as he gives evidence and is cross-examined, if counsel chooses to do so. In the case of Davis, defence counsel chose not to be in a better position than his client. Other defending counsel would take a different view. It is asking the case to be conducted with defence counsels' hands tied behind their back if they have to cross-examine someone of whose identity they have no knowledge without being able to see his or her demeanour as he or she answers the questions and, apparently, hearing some sort of distorted voice representing the replies. That cannot be right and it should be put right by amendment next week at the very least.
	I have already made the third point: this should refer to serious crime only. Fourthly, in order to determine the application, there needs to be a clear procedure including a detailed report from the police to the judge indicating the origins of the request, the investigations made, the background of the witness and, especially, details of any prior contact or relationship between the witness and the accused, his associates or family that may have a bearing on the credibility of the defence. Without that basic information, how can a judge begin to judge whether there is likely to be a fair trial?
	There must also be a clear procedure for the hearing of such applications, which provides for the defence to make submissions, unlike the present public interest immunity hearings, which take place in the judge's chambers between the judge and the prosecution alone. I echo what has been said by several others about the need for provision for special advocates. Lastly, I am glad to see that the judge is required to give a warning to the jury about the dangers of evidence in such cases. It is crucial that, as soon as possible, strong specimen directions are provided so that there is consistency in that warning.
	The granting of these orders should be truly exceptional and not become the norm wherever it is requested. As we all know and have all seen, legislation in haste is all too often defective. I am particularly pleased that there is a sunset clause, but I wish that there had been no sunrise on the Bill. Horace Rumpole would turn in his grave at the provisions of the Bill; he will probably, as usual, be proved right.

Baroness Butler-Sloss: My Lords, the noble Baroness made the point that all three main political parties, under public pressure, have given in on a Bill that ought not to be going through. Is she aware that Liberty, which has nothing to do with political parties, does not object in principle to the Bill?

Baroness Mallalieu: My Lords, I am very much aware of that. I have read the helpful briefing that Liberty has sent, but I disagree with it. I appreciate that Ministers and leaders of all political parties are in a difficult position. Many people's instincts would be to take the line that I do, but they feel that their responsibilities in office and elsewhere require them to put other considerations to the fore. However, I cannot forget the headlines in the tabloid press, which the Law Lords who gave that judgment must have read with horror. There is undoubtedly a view that all Ministers, Governments and political parties should be tougher on crime. It is the response to that urging that sometimes leads us to lose sight of what we should be doing: defending our criminal justice system.

Lord Lester of Herne Hill: My Lords, has the noble Baroness read the various reports of the Joint Committee on Human Rights? It is all-party and beyond party, and is not controlled by the Government. All its members are keen to promote human rights and they are all keen to preserve the balance between liberty and security. We have not been rushed in our work at any stage or dominated by political pressure in forming our judgments. It is not fair to committees of that kind to suggest that we are acting under some kind of political coercion, because we are not.

Baroness Mallalieu: My Lords, I apologise to the noble Lord if he feels that I was suggesting for one moment that he would bow to political pressure, but I think that a degree of political pressure is applied to political parties, particularly in another place, and understandably so. I have read the report carefully and I see that it raises a number of concerns that are not met in the Bill as drafted. I hope that practitioners such as me will raise other concerns that will find favour with Ministers next week. It is crucial, for example, that defence counsel can see what is happening. It is also crucial that the judge knows the true identity of the defendant. Those matters have not been dealt with, despite all the time that has been given to preparing these reports, and I hope that we can put that right before it is too late.

Lord Grabiner: My Lords, before my noble friend sits down for the third time, for which I apologise, she will not be pleased to hear that the definition of court in Clause 12(1)(a) includes magistrates' courts.

Baroness Mallalieu: My Lords, I am very grateful to my noble friend. Clearly yet another amendment will have to be prepared before next week.

Lord Thomas of Gresford: My Lords, my noble kinswoman Lady Walmsley revealed to the noble Lord, Lord Hunt, in the Chamber the other day that I have the eyes of a separate character. No doubt he is used to a fixed and unremitting, unforgiving glare from one eye about government legislation. That is my right eye. He may notice that my left eye is warmer and with a bit of twinkle in it. That is my glass eye. I am happy to say that that is as a result of the great skill of the painters at Moorfields Eye Hospital.
	With this Bill, a little warmth comes into my right eye. I agree with the noble Baroness, Lady Mallalieu, that consistency is needed and that it is right that we should have a statutory framework that sets out clear guidance as to how the court should operate in this difficult, if not new, situation. My purpose is to suggest how the Bill can be improved so that that framework cannot be subject to rushed appeals or complaints to the European court in Strasbourg. Whereas the framework can comply with the European convention, subject to one matter that I shall return to, an individual case may very well not. As the noble Lord, Lord Elystan-Morgan, said very properly from his great experience, the Bill does not help the judge to come to his decision. It refers to certain considerations that the judge must take into account, but ultimately the judge himself must decide whether the trial is fair.
	I have some experience in this field. I was not faced with screens, anonymous witnesses or anything of that sort until January 1993. I noticed that the noble Lord, Lord Hunt, said that anonymity was first used in 1990, but I first came across it in January 1993 when prosecuting a case in Caernarfon, to which I referred two days ago in another context. I called witnesses who belonged to the security services. Screens were erected in court, but it was possible for the defence, the prosecuting counsel, the jury and the judge to see those witnesses, who gave their evidence under the letters X, Y and Z. No one saw anything particularly wrong with it at the time. Interestingly, it was the first case ever to use the public interest immunity procedure, which was developed in the case of Johnson. We adjourned for a week to find out how that procedure should be brought into effect. In such a case where you are dealing with undercover operations, policemen or people from the Security Service, there can be no objection to their giving evidence anonymously. That is why we have no objection to Clause 4(3)(b), which refers to this.
	In 1998, special measures were introduced basically to protect the victims of sexual offences and children subject to abuse. As a result, it became commonplace for witnesses in that category to give evidence under special measures, sometimes from behind curtains and sometimes over a television link to a room in which they were kept. That has not been wholly successful. I talked yesterday to a very experienced prosecutor of this type of offence, who told me that it creates remoteness between the witness and the court and that there cannot be that communication between jury and witness and between counsel and witness that is normally to be found in a court. At times, a jury regards something on a television screen as something of a soap opera as opposed to a real situation.
	The noble Lord, Lord Elystan-Morgan, referred to creeping erosion in this field. Indeed, that appears in the judgments of their Lordships in the case of Davis. Earlier this year, I was disconcerted to be involved in a murder case that involved civilian witnesses known as X, Y, Z and so on. On the Friday before the trial, which began on the Monday, I was served with standard CPS forms. Every form said the same thing, The witness is in fear of the defendant, and applied for the witnesses to be subject to special measures. It had become so standard that the CPS had not even signed the forms, which were produced to the court as part of the application.
	No evidence was received from any of the witnesses. A police officer said that they came from an estate where they were subject to all sorts of pressures, and the learned judge made the order. As the noble Lord, Lord Marlesford, rightly said, he really had no option because the witnesses had been offered anonymity by the police and were coming to the court. No forensic evidence supported what they said, and if the judge refused that application and the witnesses gave no evidence, the case would collapse. As it happened, one of the witnesses, who was the girlfriend of the deceased, said, I don't want all this. I want to confront the defendant and say what I'm going to say to him. She gave very compelling evidence. The defendant was 17 years of age, as was she. The witnesses who came and used the special measures were men with previous convictions and aged between 28 and 45. This was a ridiculous situation in which grown men used the special measures and anonymity so that they could say what they wanted. That is wholly prejudicial. What is a jury to think when men twice or three times the age of the defendant and with convictions themselves feel it necessary to give evidence anonymously behind curtains? The jury must ask how dangerous the defendant can be.
	I want to get away from that. It is astonishing to me that some 50 cases are outstanding where anonymity is to be granted. I would bet that in every one of those cases, the request has come from the police when they ask whether someone wants special measures or whether they feel concerned. Even last Thursday, an article in the Guardian was headed: Knife crime: Police guarantee anonymity to the Ben Kinsella murder witnesses. It is true that the officer concerned had said, Come forward, then it is up to the police to persuade you to testify. If we do not persuade you, then we do not. But it is obvious where the pressure is coming from when the police guarantee anonymity. It is to that creeping erosion that the decision in the case of Davis put an end, and it is now for us to put forward a statutory framework which can ensure that fair trials can continue.
	I shall deal with some of the matters that arise under the Bill. Clause 3(2) provides relation to an application that:
	Where an application is made by the defendant, the defendant must inform the prosecutor of the identity of the witness.
	There is obviously no requirement on the prosecutor to inform the defendant of the identity of a witness, so a burden is put upon the defence team to make their witnesses known to the prosecution, but nothing in reverse. I fail to see how that is compatible with Article 6.3(d) of the European convention, which sets out the minimum right of the defendant to,
	examine or have examined witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him.
	To my mind, this subsection is a direct contravention of the above article.
	Clause 4(2) states:
	The court may make such an order only if it is satisfied that Conditions A to C ... are met.
	There was great discussion in the other place about the standard of proof and what was meant by satisfied. Was it to be beyond reasonable doubt or merely on the balance of probabilities? That matter has been the subject of authority in the case of Ewing, which was decided in 1983 where the court was considering a section of the Criminal Procedure Act 1865 dealing with forgery:
	Comparison of disputed writing with any writing proved to the satisfaction of the judge to be genuine should be permitted to be made by witnesses.
	What was meant by the satisfaction of the judge? Lord Justice O'Connor said:
	In our judgment, the words in Section 8, 'any writing proved to the satisfaction of the judge to be genuine', do not say anything about the standard of proof to be used, but direct that it is the judge and not the jury who is to decide, and the standard of proof is governed by common law.
	He went on to say that:
	It follows that when the section is applied in civil cases, the civil standard of proof is used, and when it is applied in criminal cases, the criminal standard shall be used.
	If the Government think that, in a criminal case where anonymity applications are made, a judge could be satisfied with anything less than the criminal standard, now is the time to say it, because if they do not, it will be assumed for ever that satisfied means satisfied beyond reasonable doubt.
	I am a little concerned about condition A where it is qualified by Clause 4(6):
	In determining whether the measures to be specified in the order are necessary for the purposes mentioned in subsection (3)(a), the court must have regard (in particular) to any reasonable fear on the part of the witness.
	I do not think that reasonable fear is successful as a phrase, and it should not apply to questions about the safety of a witness. It should apply to whether the witness refuses to testify because of a well founded fear, and we will put forward amendments accordingly.
	Another matter that we are concerned about is the extension of these provisions to magistrates' courts, which in our view are not suitable to the use of anonymity orders of this kind. How are they to be determined? Are magistrates to hear everything that a witness fears about the defendant, to make an order for anonymity, and then go on to try the particular defendant with the knowledge that they have acquired of him and of the threats it may be alleged that he has made to some of the witnesses in the case? That is highly unsatisfactory, and to my knowledge no provisions are made in magistrates' courts for screening and so forth. We will oppose that extension. As in New Zealand, if anonymity is sought for a witness, the case should automatically go to the Crown Court and the matter should be determined there.
	But perhaps the most important matter that we hope to bring before noble Lords in Committee is the question of the independent counsel, to which a number of noble Lords have referred. An independent counsel could be appointed by the judge to help him decide on the credibility of the witness who is claiming anonymity. The noble Lord, Lord Elystan-Morgan, suggested that he should have a team behind him who could carry out investigations on his behalf. The amendments that we propose suggest that the independent counsel should have the power to require police officers unconnected with the relevant trial to investigate and report to him whether there are matters which should be brought to the attention of the judge. This is just another way of doing it without involving the creation of a bureaucracy behind the special counsel that we have suggested.
	As in New Zealand, it is essential that there should be someone to carry out an evaluation of the expressed fear and all the circumstances that the witness claims are affecting him before the judge can come to a conclusion. We cannot have a situation, as has been happening up to now, where all the judge gets is a form and perhaps a statement from the anonymous witness, followed by a police officer saying, Well, things are a bit tough on the estate he comes from, so please grant the order. There should be a proper evaluation of the fear expressed by the witness. If that is the procedure, as Sir Ken Macdonald conceded, there will be far fewer of these applications and that will be all to the good.
	It should not be possible for a witness to say in answer to a policeman's question, Do you want special measures?, Well, yes. I suppose it will be easier to give evidence from behind a screen and for me to remain anonymous. Giving evidence is not an easy thing in any circumstances. Even the most experienced advocates such as myself find it a daunting prospect to go into the witness box and be treated in the way I have treated others in the past. It is not an easy thing, and it would be very nice to hide behind a curtain or at the end of a television camera. But that is not what justice is about. The basic principle of British lawthe law of this countryis that there must be open justice; that a person must be confronted by his accusers. It is fundamental.
	In the case in which I was involved, I had no idea who the people giving evidence against my client were. I had no idea of any links between them, whether they had any personal grudge against the defendant, or whether they had any reason for lying about the evidence that they were giving. I had my suspicions but I could not pursue them because I did not know who they were. That is the dilemma that a defence counsel faces, as the noble Baroness, Lady Mallalieu, has expressed so forcefully.
	This is a necessary Bill that could be improved, particularly by the employment of special counsel. The suggestion that there is an inherent power in the court to appoint an independent counsel already is new to me and to any judge whom I have ever come across. I am sure that the passage of the Bill will make it clear to every judge in the country that, if he feels that he needs a special counsel, he will appoint him. But this should be within a framework and in accordance with a fixed and fair procedure that applies through all these cases.
	I have wearied your Lordships long enough on this topic. I trust that we will, through co-operation and argument, be able to put these points across.

Lord Kingsland: My Lords, I thank the right honourable gentleman the Secretary of State for Justice and his ministerial team for involving the Opposition during the preparation of the Bill. I believe the same is true of the Liberal Democrats. In particular, we were given the opportunity to comment on the legislation in draft and, to the extent that our advice was taken, we are as implicated in the Bill as the Government.
	This is emergency legislation, and we do not have the opportunity to scrutinise the Bill properly. It is vital, therefore, as other noble Lords have said, that we have an early opportunity to review it thoroughly. We pressed at an early stage for a sunset clause in the Bill and I am delighted to say that we now have one. However, I have an observation to make about the detail of Clause 14. It was particularly important to the Opposition that the sunset clause had a terminal date and we have got it31 December 2009but Clause 14(3) states that the date may be extended by affirmative order for 12 months.
	We are unhappy about this part of the clause. The Government will not be surprised to hear this. They are well aware that, in order to terminate the long-drawn-out debate in your Lordships' House in March 2005, they undertook to provide an opportunity to review the Prevention of Terrorism Act control orders within a year. That undertaking was not met, and for three years the Government have been able to extend the length of that Act, without further scrutiny, through affirmative orders in your Lordships' House. We have allowed those affirmative orders to go through because of a longstanding constitutional convention that it is only in the rarest circumstances that the Opposition vote against an affirmative order. But I put the Government on notice that, if we are faced with a draft affirmative order at the end of 2009, we will not regard ourselves as bound by that constitutional convention.
	My noble friend Lord Marlesford, quite properly, made some extremely disparaging remarks about retrospective legislation. I share my noble friend's repugnance on that score. He has, therefore, made me extremely uneasy at having, during the debate on the Statement some two weeks ago, endorsed Clause 11. I comfort myselfI hope he will feel comforted laterwith the belief that it will not make much difference to the outcome of any appeals of individuals already convicted in a trial which involved prosecution witnesses who gave evidence anonymously. My reason for reaching that conclusion will, I trust, become obvious in the next five or six minutes.
	I also thank my noble friend Lord Goodlad, the chairman of the House of Lords Constitution Committee, for giving a brilliant summary of the conclusions of that committee. As its report was only published today, I have had no opportunity to read it; and I am therefore extremely grateful to him.
	It seems that the Appellate Committee of your Lordships' House is attacked whatever approach it takes to the development of the common law. When it develops common law principles, such as negligence or the law of rape, in a way which adjusts them to contemporary social mores, it is blamed as usurping the role of Parliament. When it takes the opposite view it is blamed for not reaching the right result. The noble and learned Lord, Lord Bingham, in my view, was absolutely right to reach the decision that he did. If one looks at the history of the common law on anonymous witnesses, there is no evidence that it had developed in any way since the 18th century. That was underlined by the reports of Lord Diplock and Lord Gardner at the height of terrorism in Northern Ireland during the 1970s. The noble and learned Lords in the Appellate Committee, I repeat, reached exactly the right decision. It is interesting to note that my right honourable friend Michael Howard in the House of Commons, during the debate on Tuesday on this measure, went out of his way to applaud what the noble and learned Lord, Lord Bingham, and his colleagues did, saying that they were absolutely right not to seek to legislate in circumstances where the history of the common law gave them no grounds for it whatever.
	The noble and learned Lord, Lord Bingham, was, in my view, extremely constructive in the way that he confronted the dilemma that the decision of the Appellate Committee posed to the Government. In talking about the intimidation of witnesses, he said,
	this is not a new problem, but it is a serious one. It may very well call for urgent attention by Parliament.
	That is as close as one could possibly get to saying that the noble and learned Lord hoped that Parliament would, at an early stage, confront this problem.
	I understand entirely what the noble Baroness, Lady Mallalieu, said, and I sympathise with her motives for saying it; but in the context of R v Davis, the steps that the Government have taken to produce emergency legislation have been the correct ones. The noble and learned Lord, Lord Mance, also went out of his way to support the noble and learned Lord, Lord Bingham. He said that,
	it may well be appropriate that there should be a careful statutory modification of basic common law principles. It is clear from the Strasbourg jurisprudence ... that there is scope within the Human Rights Convention for such modification.
	The questionand I believe this goes to the heart of the matteris: how much scope? There was clearly none in a case such as Davis, as the noble and learned Lord, Lord Mance, stated. It was absolutely clear that the effectiveness of the defence's case depended entirely on investigating the motives of the anonymous witnesses; but that was impossible to do. He also concluded that the evidence of the three anonymous witnesses was decisive to the outcome of the case. In those circumstances he concluded, as did other noble and learned Lords in the Appellate Committee, that the conduct of the Davis trial plainly contravened the European Convention on Human Rights. It was, therefore, puzzling to read paragraph 50 of the Explanatory Notes that were attached to the draft Bill in the House of Commons, which said that this Bill will enable us to go back to the situation before Davis. I note that that is not in the Explanatory Notes to the Bill in your Lordships' House. It may have been an aspiration of the draftsman, but it is plainly incorrect. We cannot go back to the pre-Davis situation.
	The approach that the European Court of Human Rights takes to these matters is well summarised in the case of Doorson v the Netherlands, on which the noble and learned Lord, Lord Mance, heavily though not exclusively relied. I hope that I will not incur the wrath of your Lordships' House if I read just three paragraphs from the judgment. At paragraph 67, the court said:
	The Court's task under the Convention is not to give a ruling as to whether statements of witnesses were properly admitted as evidence, but rather to ascertain whether the proceedings as a whole, including the way in which evidence was taken, were fair.
	At paragraph 70, it continues:
	It is true that Article 6 ... does not explicitly require the interests of witnesses in general, and those of victims called upon to testify in particular, to be taken into consideration. However, their life, liberty or security of person may be at stake, as may interests coming generally within the ambit of Article 8 ... of the Convention. Such interests of witnesses and victims are in principle protected by other, substantive provisions of the Convention, which imply that Contracting States should organise their criminal proceedings in such a way that those interests are not unjustifiably imperilled. Against this background, principles of fair trial also require that in appropriate cases the interests of the defence are balanced against those of witnesses or victims called upon to testify.
	It is interesting to note that when the noble and learned Lord, Lord Mance, concluded his analysis of the European legislation and applied it to the Davis case, he came to the conclusion that, on the facts, no such balancing had taken place.
	Lastly, in paragraph 76, the court said:
	Finally, it should be recalled that even when 'counterbalancing' procedures are found to compensate sufficiently the handicaps under which the defence labours, a conviction should not be based either solely or to a decisive extent on anonymous statements.
	As the noble Lord, Lord Elystan-Morgan, said, the Strasbourg cat can jump either way. There are many other Strasbourg cases in which these matters have been considered, which led the noble and learned Lord, Lord Mance, to the conclusion that the criterion of solely or decisively is not necessarily, on the facts of the particular case, the determining factor. However, there is no doubt that it was the determining factor in Doorson. I think it would be dangerous for any court to conclude that the law of the convention will stray very far from that laid down in those three paragraphs. I say to my noble friend Lord Marlesford that that is why I am perhaps not over-conscience-stricken about my support for Clause 11.
	Wisely, the Bill is not concerned with what is a fair trial; it does not lay down the circumstances in which a trial is or is not fair. It does set out the considerations which a judge will have to take into account under it such as to reflect adequately the jurisprudence of the convention. We cannot be absolutely certain what the court in Strasbourg will say in the future. The noble Lord, Lord Lester, had some interesting observations to make about that in respect of the court's composition and the traditions of the inquisitorial system; but it is nevertheless important that judges are given as accurate a framework as possible within which to work. The Bill seeks to do that, and, broadly speaking, we support it. However, as the Government might imagine, we will raise some detailed matters in Committee. These are primarily matters that arose when we compared the Bill with the New Zealand legislation of 2006. I want to raise three specific matters, one of which has been dealt with extremely well by the noble Lord, Lord Thomas of Gresford.
	The New Zealand Bill says, first, that the use of anonymous witnesses can be justified only in exceptional circumstances. I think that it is commonly agreed that, in some areas of the United Kingdom, anonymity is offered to witnesses almost routinely as an incentive to them to give evidence. In its note on the Bill, the Bar Council observed:
	We must be careful that anonymity remains the exception to the norm. Such arrangements cannot be offered routinely by prosecuting authorities to witnesses as an incentive to give evidence. It is important to recall ... that special measures for witnesses, and in particular anonymity, are only ever required in exceptional circumstances.
	The Government have not included an exceptional circumstances provision in the Bill. Our view is that they should, otherwise the evil to which the Bar Council refers will continue.
	The second ingredient in the New Zealand Act that does not appear in the draft Bill is that the cases in which anonymity is granted should be cases of real gravity. There are different views about what that means. One approach would be to set out the particular offences in which witness anonymity could be applied for. That would be extremely unsatisfactory because, under apparently quite inoffensive offences if I can put it that way, one can have serious matters that would justify applications for anonymity. For that reason, some such provision ought to be included in the Bill.

Lord Lester of Herne Hill: My Lords, I do not wish to prolong the debate, but I do not know whether the noble Lord is aware that I put this to the Director of Public Prosecutions when I said that I could not understand why gravity of offence was in any way significant since it cuts both ways; obviously there should be a fair trial, whether the alleged offence is grave or otherwise. Is it not therefore rather a dodgy factor to be putting into a Bill?

Lord Kingsland: My Lords, I am most grateful, as I always am, for the noble Lord's intervention. I was not aware of his conversation with the Director of Public Prosecutions. For what it is worth, my view is that gravity ought to be included in the Bill. We will have an opportunity to return to the matter in Committee.
	The third ingredient of the New Zealand Act that is not in the Bill is the ability to appoint a special counsel to deal with questions of fact that bear on the decision of the court whether to agree to an application for anonymity. The noble Lord, Lord Elystan-Morgan, rightly pointed out that there is an existing inherent right, the authority for which is in Archbold, to appoint such a counsel; it is done very rarely, but I note that it was taken advantage of by the Court of Appeal, no less, in the Davis case.
	The difficulty about relying on that is that there is no established procedure for the way in which a special counsel should operate. That is why I am in agreement with noble Lordsand the noble Lord, Lord Thomas of Gresford, could not have put the case betterto include a provision in the Bill that sets out the duties of such a counsel. In another place, the Government did not commit themselves either way except to say that it was too late to include such a provision in an emergency Bill and that, between the passing of the Act and the review of it that is due to take place in the Victims and Witnesses Bill next year, they would give this matter close attention. We shall support any amendment that is tabled next week on the matter although we will not vote for it if it is put to the vote. I have reached the conclusion that the Government have a real problem about setting out detailed rules for the responsibilities of such a counsel between now and the middle of next week. In those circumstances, they should be given the benefit of the doubt.
	We have other matters of no less importance to bring to your Lordships' attention in Committee; but they can rest until then.

Baroness Scotland of Asthal: My Lords, this has been a constructive debate. I warmly welcome the support we have received from all sides of the House and the broad consensus that the problem of witness intimidation is a serious one. I am particularly indebted to the noble Lord, Lord Goodlad, for his erudite exposition and to the noble Lord, Lord Lester of Herne Hill, for his excellent speech. Both speeches encapsulate the views of the Constitution Committee, whose report I know a number of noble Lords did not have the opportunity to read in full, and foreshadow the conclusions that may well come out of the second important committee, dealing with human rights. I thank them for that, not least because they have done such an excellent job in outlining an analysis of the law that they have saved your Lordships the burden of hearing me repeat it. I agree with them without reservation. I also endorse the comments made by my noble friend Lord Grabiner. He, too, identified clearly the issues with which we now have to grapple.
	The difficulty is clear: in cases involving violent crime, particularly gun and gang crime, fear about the consequences of giving evidence can prevent witnesses coming forward and allow very serious offenders to escape justice. I therefore also welcome the recognition that the judgment in the case of Davis has left us with a difficult problem to address. Courts no longer have a power to allow witnesses to give evidence anonymously in almost all circumstances. Several Law Lords in Davis recognised that Parliament would wish to consider legislation to give courts a power to allow anonymous evidence. It is critical, as a number of noble Lords made clear, that we act quickly to correct that deficiency in law. The Crown Prosecution Service has been able to identify the extent of the problem, and I am glad that we have been able to indicate what those figures may be.
	The extent of this problem is reflected not only in our country. I had the privilege of attending the Commonwealth Law Ministers' meeting yesterday in Edinburgh, where this very issue was debated. More than 38 countries were represented, if one was to include the overseas territories and Crown dependencies. There was agreement that witness intimidation was a real problem for those countries and that anonymous evidence was an appropriate response in certain cases.
	I also had the privilege of speaking to the New Zealand Associate Minister for Justice, Lianne Dalziel MP. She indicated that the New Zealand legislation had been operating effectively and successfully for the past 10 years and was felt to be consistent with the New Zealand Bill of Rights. Indeed, she clearly identified the key issue at stake when she said to me, At its core, this is about getting to the truth of the matter and about how to secure a fair trial for both the defendants and victims and proper protection for witnesses. I agree with her.
	I say to the noble Lord, Lord Marlesford, that I understand his wanting to rely forcefully on the comments made in the Spectator by the noble and learned Lord, Lord Lloyd of Berwick. Since the noble and learned Lord is not here, it is only right to say that I believe that he wrote that article before he had had the advantage of reading the provisions of the Bill. Since that time, he has had an opportunity both to write to and to speak to my noble friend Lord Hunt and he has expressed his compliments in relation to the Bill. I hope that he will forgive me if, in order to reassure the noble Lord, Lord Marlesford, I quote what he says in the final paragraph of his letter to my noble friend, dated 9 July:
	Finally, the Bill team has, in my view, done an astonishing job in providing such an excellent Bill so quickly.
	Knowing the noble and learned Lord as I do, I am sure that he will not hesitate to find fault, if fault is to be found, and if he were to join us later. He indicated in his letter that he did not intend to harry my noble friend Lord Hunt at Second Reading, but I do not suggest that that will be the stance that he maintains thereafter.
	In relation to these difficult issues, I understand the concern of my noble friend Lady Mallalieu and her passion to ensure that a fair trial is maintained and that any procedure maintains the importance of the innocence of the accused until proven guilty. The fact that she so powerfully brings that to our attention does her honour. We share that passion and, in seeking to put these provisions together, the Government have had the intention to make sure that the fair trial is in no way jeopardised.
	I believe that it is acceptable for trials in serious cases to be dealt with in such a way as to avoid their collapse or appeal on matters of law. When we seek to make these provisions, we have that very much to the forefront of our mind. As all noble Lords accept, we are trying to do a difficult thing: we have to preserve the fairness of the trial in accordance with Article 6 and, in order to do that, we have to make sure that witnesses are in a position to give their evidence fairly, without fear or intimidation.
	I do not agree with the assessment of the noble Lord, Lord Marlesford, that these cases are prepared by police and presented as a fait accompli to the court. The Crown Prosecution Service has a duty to act as gatekeepers to the criminal justice system, insomuch as it is now entrusted with the duty and responsibility of charging. There is, therefore, an opportunity to ensure that an appropriately high level of scrutiny is given to any decision to apply for an order of anonymity. Both the Director of Public Prosecutions and I intend to look at what appropriate guidelines may be necessary to secure that appropriately high level of scrutiny.

Lord Marlesford: My Lords, how does the noble and learned Baroness square what she has just said with what we heard from the noble Lord, Lord Thomas of Gresford, about a recent example in which he was personally involved?

Baroness Scotland of Asthal: My Lords, it is quite right, given the way in which things have evolved, that we do not have, before putting this into statutory form, a common standard that is applied right the way across the board. If anything, the Law Lords' decision in Davis has given us an opportunity to scrutinise how this process in fact works and to make sure that it is as tight, appropriate and acute as it should be and as we would wish it to be.

Viscount Bledisloe: My Lords, the noble and learned Baroness referred earlier to serious cases. She has not really dealt with the point raised by the noble Baroness, Lady Mallalieu, that the Bill is not limited to those. Would the noble and learned Baroness be prepared to bring forward amendments to remove magistrates' courts from the Bill and to limit its provisions to offences that carry a sentence of, let us say, three or five years? It surely is wholly wrong to have a procedure of this kind for minor cases.

Baroness Scotland of Asthal: My Lords, of course I hear what the noble Viscount says, but two species of cases would cause us difficulty if we did that. There seems to be general assent that the use of test purchases as a means of identifying levels of criminality in relation to drugs and other offences is a right and appropriate way forward, not least because such approaches tend to have a high incidence of pleas of guilty. It is possible that some of those cases will appear before a magistrates' court. There are also cases of some seriousness that go to juvenile court and which are obviously covered by the same grounds. Breaches of a control order may be of a less serious nature and can properly be dealt with in the magistrates' court. If there is such a breach, albeit of a lower nature, one can anticipate that in those cases anonymity may well be necessary. Therefore, it is not possible simply to eradicate the need in the lower courts. The noble Lord, Lord Lester, was right to emphasise the need, no matter how grave the case, for fairness to apply.
	Obviously, there are issues that we will have to continue to consider. We will undertake to look at all of them during the period that will elapse between this legislation and the new legislation that we hope to bring forward.

Lord Thomas of Gresford: My Lords, how does one make an application for an anonymity order to the magistrates' court that is dealing with the case and will hear why a person is in fear of death or injury as a result of what the defendant has said or done? How does one deal with the possibility of appointing special counsel when it would require specific statutory authority for the magistrates' court to be able to do that? It has no inherent jurisdiction that would enable it to make an appointment of that sort.

Baroness Scotland of Asthal: My Lords, as the noble Lord knows, and as has been indicated by the noble Lord, Lord Kingsland, we intend to look at how and when the procedure for special advocates will be dealt with. I intend to deal with that in a little while. Your Lordships will know, for example, that in the case of H and C the court, which included the noble and learned Lords, Lord Bingham and Lord Woolf, said quite specifically that special counsel might exceptionally be appointed in a criminal case. That House of Lords decision was in 2004.
	There is no need to place special advocates on the face of the Bill but there is an opportunity for the court, if it so desires, to make such a request. It is not the place of emergency legislation to make these provisions. I accept that there are delicate balances to be drawn and we will, in slightly slower time, need to address those issues.

Lord Goodhart: My Lords, the noble and learned Baroness referred to test purchases as one of the circumstances in which it might be necessary to provide anonymity in a magistrates' court. Is the suggestion that witnesses would be threatened with violence or that they would be identified and therefore be less useful as witnesses in future cases? If it is the latter, is that really the type of case in which it would be appropriate to provide anonymity?

Baroness Scotland of Asthal: My Lords, if noble Lords look at Condition A, they will see that that is the fourth species dealt with, because it is in the interests of justice that those who undertake undercover processes or need the cloak of anonymity for that reason should have it. I believe that there is general assent that that has been an appropriate way forward and has not caused unfairness, because the issue is not the credibility of the witness but the accuracy of what the witness said. It matters not whether the officer is called Jones, Brown, Scotland, Lester or whatever; it is the content of the information that they give and the ability to challenge it. I do not believe that that issue has caused anxiety. The area of anxiety appears to have been credibility. Attention has been focused on whether in those circumstances there could be a fair trial and whether sufficient safeguards exist to make sure that that comes forward.
	A number of noble Lords, not least the noble Lord, Lord Marlesford, mentioned retrospectivity. I understand the discomfort of the noble Lord, Lord Kingsland, but he would be right to be comforted. The clauses that deal with appeals and existing cases do not retrospectively validate orders made before the commencement of the legislation; instead, they allow the receiving courts to decide whether the orders made would now be permitted. The report of the House of Lords Select Committee on the Constitution states at paragraph 18:
	We consider that as a matter of British constitutional practice, there is an acceptable basis for the provision in clause 12 barring appeals succeeding on the sole ground that a court before the commencement of the Criminal Evidence (Witness Anonymity) Bill lacked legal power to impose an order for witness anonymity. The public interest outweighs a defendant's interest in benefiting from a past defect in the trial process given that there is an express requirement for the appeal court to consider whether, overall, the trial was fair.
	We think that the matter has been adequately dealt with.
	The noble Lord, Lord Thomas of Gresford, was concerned about the police offering anonymity too freely to the witness, which ties the hands of the judge. The point was made earlier, too. The Crown Prosecution Service, the National Policing Improvement Agency and the Metropolitan Police are developing guidelines on the circumstances in which it would appropriate to apply for witness anonymity orders. They are discussing the contents of the guidance and will be informed of concerns about the practice that had developed before the House of Lords judgment in Davis and what your Lordships have said in relation to it.

Lord Thomas of Gresford: My Lords, will the noble and learned Baroness assure us that, in preparing the forthcoming Bill, she will consider setting up a code of practice, as we have with other important areas where the police interrogate witnesses, as opposed to simple guidelines? It is just as important to have a statutory code of practice in this area, rather than guidelines over which Parliament has no control.

Baroness Scotland of Asthal: My Lords, I certainly hear what the noble Lord says. We have found it incredibly helpful that the whole process adopted in relation to this Bill has been consensual, helpful and collaborative. We hope that that same process continues as we seek together to try to craft something that will be fit for purpose and inure to the benefit of justice. The comments of all noble Lords today have been listened to and consideration has been given to them. I cannot say to the noble Lord that we will produce a code of practice, but we will certainly look at that suggestion.
	I hope that I can reassure the noble Lord, Lord Thomas of Gresford. The court is required in Clause 4(2) to be satisfied that Conditions A, B and C are met and that the judge is not reaching a conclusion on guilt or innocence where a criminal standard of beyond reasonable doubt would be an appropriate test. The judge needs to be satisfied that the conditions are met. If the court is not so satisfied, the order cannot be made. That is an important safeguard.
	I know that the noble Lord, Lord Kingsland, is unhappy about the power to extend the sunset date of 31 December 2009. I assure him that we have every intention of subsuming the provisions of this Bill into the Law Reform, Victims and Witnesses Bill. We would expect that Bill to be enacted by the end of the 2008-09 Session, but we have no crystal ball. An unexpected turn of events may arise that prevents the fourth Session Bill from being enacted by this deadlineI hesitate to say that it may be more in your Lordships' hands than in those of the Government. We must therefore provide a backstop that enables the sunset date to be extended. I understand why noble Lords opposite insist on a precise date, but certain consequences flow with it.

Lord Lester of Herne Hill: My Lords, does not the noble and learned Baroness agree that if the backstop were precise and not capable of extension, it would strengthen departmental bidding for parliamentary time and concentrate minds extremely well?

Baroness Scotland of Asthal: My Lords, I reassure the noble Lord, Lord Lester, that the date of 31 December has done just that, but the amendment tabled by Nick Herbert in the Commons also provided for the sunset date to be extended. It seemed therefore to be wanted by others and not just the Government.
	I draw to the attention of the noble Lord, Lord Kingslandit is terrible knowing noble Lords' first names, because one is always tempted to use thema further comment made by the noble and learned Lord, Lord Steyn, in the case Re A (No 2) in 2002. The noble and learned Lord very much endorsed comments made by other noble Lords when he made it clear that it was well established that the right to a fair trial in Article 6 was absolute in the sense that a conviction obtained in breach of it cannot stand but that the only balancing permitted is in respect of what the concept of a fair trial entails. Account can be taken of the familiar triangulation of interests of the accused, the victim and society. In that context, proportionality has a role to play.
	I know that all noble Lords agree that we want a fair trial for all defendants, but we know that certain defendants want an unfair trial, where the witnesses who are able to give evidence fairly against them are prevented from doing so. We have to make sure that it is a fair trial not only for the defendant but also for the victim and that it is fair in taking into consideration the witnesses' fair and proper needs. I thank all Members of the House who have helped the Government so hugely in making sure that this emergency legislation is the best that we could make it.
	On Question, Bill read a second time, and committed to a Committee of the Whole House.

Pensions Bill

Lord McKenzie of Luton: My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.

Moved accordingly, and, on Question, Motion agreed to.
	House in Committee accordingly.
	[The DEPUTY CHAIRMAN OF COMMITTEES (Viscount Simon) in the Chair.]

Lord Skelmersdale: moved Amendment No. 112ZD:
	After Clause 66, insert the following new Clause
	Principles
	(1) In carrying out its functions under section 66 in relation to a scheme established under section 58, the trustee corporation must have regard to the principles in subsection (2).
	(2) The principles are that
	(a) participation in the scheme should be encouraged and facilitated;(b) the burdens imposed on employers by the scheme should be minimised;(c) any adverse effects on other qualifying pension schemes, and on members and future members of those schemes, should be minimised; (d) the cost of membership of the scheme should be minimised;(e) the returns to members on retirement should be maximised;(f) the preferences of members and future members should, so far as is practicable, be taken into account in making any provision about investment choice in the scheme;(g) diversity among members and future members of such a scheme should be respected.

Lord Skelmersdale: With this rather drawn-out Committee stage, we tend to forget that Clauses 65 and 66, which in continuous terms we have just finished debating, set up the all-important trustee corporation and give it a very broad remit of functionsso broad, indeed, that, apart from running the pension scheme that the Secretary of State is to set up under Clause 58, its only function is set out in Clause 66(l)(b), which refers to,
	any other functions it is given by or under an enactment in connection with the scheme.
	This, I assume, means yet more pensions Bills are in the pipelineor is it there because of the Minister's favourite word, flexibility?
	We know already that the scheme itself will be prepared by the Personal Accounts Delivery Authority and handed to the trustee corporation on a plate, as it were. Shortly after thatwe still do not know how shortly and I suppose that yet again the Minister will say that he does not knowPADA will leave the scene and become otiose. We on these Benches find it mysterious that, while both PADA and the trustee corporation are given functions, only PADA, under Clause 70, on which we will have a large group of questions, is given principles. I do not want to anticipate those debates now, because it is obvious that the trustee corporation needs to have rather different ones from those of PADA.
	This brings me to the amendment, which is almost self-explanatory. The seven principles that we have identified most definitely apply to the organisation, the trustee body, which is to run personal accounts for as long as they existwell into the next century, one hopes, when PADA is long dead and buried. Paragraph (a) of proposed subsection (2) says that it should be the job of the trustees to continue to encourage and facilitate jobholders in the relevant income bracket to first join and then continue with their personal account until retirement. It goes on to say that the trustee corporation should make every effort to minimise the burdens that it will inevitably place on employers, among whom will be new employers in the years to come. It will be up to the trustees, not anyone else, to keep them informed, but notor it should not be to harry them. If this is really necessary, it should be role of the Pensions Regulator.
	Proposed subsection (2)(c) underlines the fact that the trustees are running a default pensions scheme. In no way should they see it as their role to poach members from other schemes, especially direct contribution ones, but that thought applies equally to hybrid and final salary schemes, with which they may be seen to be competing. Again, I remind the Committee that I am thinking in particular of life after PADA and the vast amounts of money that the trustees will very quickly end up handling.
	This thought continues through into the next principle: continuing to keep down costs. Just because PADA hands on a scheme that was originally going to be paid for by charging the members 0.3 per cent of their pension investment a year, that does not mean that the figure of 0.3 per cent will continue to be possible in, say, 2020 or 2080. Nobody knows what is round the corner as far as the cost of personal accounts is concerned. The ink had hardly dried on the masses of reports and government statements that have surrounded personal accounts before I heard almost everywhere that the 0.3 per cent that the Pensions Commission regarded as ideal would much more likely be 0.5 per cent. I have even heard 0.7 per cent mentioned. Whatever this final figure is, though, care should be taken to keep it to that, and even to reduce it, when the trustees start to handle very large amounts of money.
	Next, it seems to be a sine qua non that, unless the jobholders' investments are seen to be having a reasonable return compared to other investmentsISAs maybe, even direct investment in the stock exchange, or in the currently somewhat unlikely event that lifetime savings accounts come on to the investment scenejobholders will opt out. I am sure that the Minister will tell me that, because of the employer putting 4 per cent into personal accounts, other investments cannot possibly do better. However, you have only to look at the comparison tables in the weekend papers to see that that ain't necessarily so. He might also tell me that ISAs are different because they are bought out of taxed income and are tax free only when they are released. That is, of course, correct. However, overall, if they are kept long enough, they can produce a perfectly reasonable return, especially if the full amount allowed is invested. This, of course, is more than twice the maximum allowed under PAs.
	I believe that even though the Government expect that the trustees will start with a number of fundswe are currently told between five and l0they might well decide that more or perhaps fewer are appropriate. Again, we will be discussing that shortly. It should be their job to take the jobholders' wishes into account. Muslims, for example, are barred by their religion from receiving interest and might refuse to put money into an interest-only fund. Indeed, such a fund would not normally produce a particularly good return anyway. What types of funds are currently envisaged? Clearly there will be a Sharia fund and a default fund, as well as perhaps a stock exchange tracker fund, as the noble Lord, Lord Oakeshott, suggested last week. There may be an ethical fund, which we will debate shortly, and surely there will be others. As the member ages, it might well be sensible for him to move from one fund into anotherpossibly from a medium-risk one into something safer. Will transfers between funds be possible or even suggested by the trustees?
	Up to now, we have been thinking only of the beginning of the personal accounts scheme. What about the end? We assume that, under the current arrangements, when the jobholder retires he will be bought an annuity. As we know, annuities are a gamble; the value depends on the rate on offer when you retire. That can make a difference of hundreds of pounds, especially if you are a smoker or live in an unhealthy part of the United Kingdom, or even have held a personal account from the age of 22. A better rate can often be achieved by group purchases, as the Financial Assistance Scheme has discovered, and would usually result in a better return for the retired PA investor. Will group annuities be the norm? Will they even be contemplated? We do not know and I am sure that the Minister is not in a position to tell me.
	That brings me, finally, to diversity, which, as proposed subsection (2)(g) says, the trustees should respect. I would expect that a jobholder in 2040 would have considerably better financial knowledge than one in 2012. One hopes that, with all the information, including money and savings lessons in school, tomorrow's pensioners will be much more savvy and will be able to understand all the freely available advice. Different groups of investors will have different needs and therefore different requests, not only as to which fund to invest in. For example, they may well realise that fund A is not going nearly as well as fund C. That may be because of the performance of the fund managers or there may be other factors, such as how the fund was set up in the first place. Others may be quite satisfied, especially if they get an annual return showing that their fund has done better than the investment would have earned at interest. There is also the matter of what goes into the annual return and whether there is enough information therein to be really informative. Yet others will doubtless feel the need to opt out for a period, maybe several periods. Yes, there will certainly be different groups.
	The trustees need to keep all these thingsmaximising participation, having minimum burdens on employers, competition with other pension schemes, the cheapness of management charges, the maximisation of returns to members and their preferences, and differences between members' wants and needsin the forefront of their minds. To keep these principles there, they should be in the text of the Bill. I beg to move.

Baroness Thomas of Winchester: Because of the short notice of our debating the Bill today, my noble friend Lord Oakeshott is unable to take his place on the Front Bench; he has a prior commitment elsewhere.
	I fear that we on these Benches cannot support the amendment because it is too prescriptive. Our approach is that the scheme must be as simple as possible, with no bells and whistles, as the chairman and chief executive have repeatedly and clearly stated.

Lord McKenzie of Luton: I thank each Member of the Committee who has spoken. I say to the noble Baroness, Lady Thomas, that I was aware that the noble Lord, Oakeshott, was unable to make it today. I am sure that she will ably substitute for him.
	The noble Lord, Lord Skelmersdale, ranged widely over a number of issues that we shall pick up on in subsequent amendments, so I will not dwell on some of those details in my reply. The proposed new clause would require the trustee corporation to have regard to a set of principles that is essentially a variant on those to which the Personal Accounts Delivery Authority must have regard in exercising its functions. I emphasise that the functions of the trustee corporation are very different from the functions of PADA. PADA is tasked in the Bill with designing the scheme within the framework of the principles set out in Clause 70. These important principles will have a vital part to play in the design of the scheme: they will underpin everything that the authority does. I know that Members will wish to discuss them when we get to that part of the debate in Committee, so I will wait until then for that.
	However, we are clear that the principles do not have an explicit part to play in the trustee's functions, and for very good reasons. The trustee corporation will be charged with running the scheme, as designed by PADA, within the framework of the principles and other requirements of the Bill. The scheme will be set up as a trust-based occupational pension scheme, so the trustee must always act in the best interests of members and beneficiaries. That is the duty of trustees of other trust-based schemes, and will apply here too.
	Of course, the principles set out in the amendment appear largely to fall within that overriding duty; most certainly, participationin proposed new subsection (2)(a)cost of membership, returns on investment, members' preferences and diversity do. They are directly related to members and beneficiaries, so will generally come within the duty of the trustee which, as I am sure noble Lords are aware, is embedded in trust law.
	That leaves proposed new paragraph (b), which deals with minimising burdens on employers, and proposed new paragraph (c), which covers minimising adverse effects on other qualifying schemes. However, I am afraid that I cannot agree that either is directly relevant to the trustee corporation. PADA is charged with designing a scheme that does not place disproportionate burdens on employers. The trustee will be responsible for running that scheme, as designed by PADA. I see no reason why the trustee corporation, any more than any other set of trustees, should be charged with considering adverse effects on other schemes. The scheme it will be running will have a unique feature making it suitable for its target group and will be designed to complement, not replace, other qualifying schemes. Indeed, both proposed new paragraphs (b) and (c) are in PADA's principles so will be firmly entrenched in the design of the scheme, as will the others under Clause 70. However, they are precisely about the design of the scheme, not about the running of it, and are therefore not for the trustee corporation. I hope that that distinction is clear.
	There are also some serious concerns about the legal and operational implications of requiring the trustee to have regard to these principles, which I shall explain. The job of a trustee is mainly set out in their particular trust instrument, under general duties of trust law applying to all trustees and in additions made by pensions law for all pension scheme trustees. The amendment would impose an extra layer of scheme-specific statutory duties on this trustee, and only this trustee. In substance, this is unnecessary for the reasons I have already explained.
	However, we should not assume that such duplication is harmless. The job of legislation is to change the law, and it is therefore always assumed to mean something. Knowingly duplicating duties that already apply, and things which will already be embedded in the scheme, is therefore bad in principle. In this case, the principles would also be legally and operationally undesirable in practice. They would add a unique further layer of prescription, in statute, applying only to this scheme and only to this trustee, which is a body with an already challenging job. Not only would the trustee have to do all that is already required by the scheme trust, by trust law and by pensions law, it would have to consider these new principles and their interaction with each of those other sets of duties, too.
	The trustee's main job is to serve the interests of actual beneficiaries. The balance between those interests and the interests of other people will be set out in the trust scheme. These principles would confuse what that duty is, and could upset that balance in unexpected ways. For instance, they could result in suggestions that issues on which key judgments have already been made are reopened; employers' interests are mentioned, for example, as are the interests of other schemes. These things are all going to be considered in designing the scheme and, in important respects, will already be built into it: contribution limits, transfers and investment choice.
	Putting these principles in legislation would create a new opportunity for someone to challenge the corporation on the design of the scheme, and ultimately to do so in the courts. That is not appropriate. These are, first and foremost, matters for PADA, then consultees and then Parliament in designing the scheme itself.
	In summary, not only will adding a new and unique statutory burden fail to add anything to what this Bill already achieves, it also risks confusion and complexity that could be really detrimental. I hope that the noble Lord has therefore been helped by that explanation. It would not be appropriate to impose these principles upon the trustee corporation. I ask him to withdraw the amendment.

Lord Skelmersdale: So, according to the Minister, the trustees are to have functions but no principles. These functions are to be given to the trustees by the Secretary of State, and we have absolutely no idea what they may be. It is all very well for the Minister to shake his head

Lord McKenzie of Luton: It is absolutely not right to say that trustees will have no principles. As I explained, the role of trustees is embedded in trust law in pensions legislation. The scheme that will be set up will be operated by the trustees in the light of those principles, policies and obligations. That is what this is about. To translate the principles of PADA, which is designing the scheme, into the trustees' obligations is wholly inappropriate.

Lord Skelmersdale: Surely to goodness, the noble Lord is still thinking of the original operation of the trustees. I was thinking much further ahead. I have no doubt that the needs of the trustees will change over the next century or so. Principles and functions are two very different things, as I was about to say when he interrupted me.
	Of course, I readily understand that the trustees will operate under existing trust law and, indeed, any other trust law that happens to come about over the next X years, but the Bill does not give them any principles by which to work. I shall not press the amendment today, but I will think very carefully about it before the next stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Judd: moved Amendment No. 112ZDA:
	After Clause 66, insert the following new Clause
	Pension investments: crimes against humanity, genocide and war crimes
	The trustee corporation, and anyone appointed by the trustee corporation to manage the investment of pension money, may disinvest or sell, or not purchase or invest in, securities issued by persons whom the trustee corporation determines on reasonable grounds conducts, or has investments in, business operations that are associated with the commission of crimes against humanity, war crimes or genocide, the content of which is defined in the Rome Statue of the International Criminal Court and adopted into English law by the International Criminal Court Act 2001 (c. 17).

Lord Judd: I hope it will be for the convenience of the Committee if I speak also to Amendment No. 112ZDB. I do so in the context of my strong support for the Bill and its purposes. At the outset I pay tribute to the Aegis Trust and other organisations that do much effective work in this sphere of public policy.
	The Bill is designed to respond to the needs of the vulnerable in our society. It clearly should not do so on the backs of vulnerable, exploited or oppressed people elsewhere in the world. Either the Bill is about equality, dignity and fairness or it is not. Such principles have universal application or they are not principles at all.
	The door to the principles of the amendments was opened by the noble Lord, Lord Skelmersdale, on the previous amendment. Indeed, it is ajar in Clause 70(2)(e). The first amendment in this group would confirm that trustee corporations are allowed to disinvest pension money from companies associated with crimes against humanity, war crimes or genocide. The second would require the trustee corporation to have a written policy on ethical investment, covering such issues as environmental, social, human rights and good governance practices. This would be more than is currently required under the statement of investment principles in the Pensions Act 2004, which simply requires investors to state whether they have an ethical investment policy.
	Let me be clear. I am not talking about mandatory principles which investors must take into account. The amendments require investors only to have an independent written policy covering the ethical considerations which motivate their investment decisions. There are three reasons for these amendments. The first, and in some ways the most important, is legal. At present, trustees and institutional investors are not sure beyond doubt that they are permitted to take into account a company's human rights or environmental record when deciding whether to invest in a corporation. This uncertainty stems in part from a trend in the case law which has tended to underpin the requirement that institutional investors are bound by their fiduciary duties always to act, first, in the best interests of the beneficiaries and, secondly, to be prudent in their financial evaluation of investments, always taking into account the highest rate of return at the lowest risk. Where that leaves ethical matters in the spectrum of considerations is far from clear.
	The Pensions Act 2004 allows investors to indicate in their statements of investment principles what, if any, ethical considerations are being taken into account, but this is entirely voluntary. It suggests that investors may take these issues into account but does not clarify whether they may move beyond profit maximisation to take such ethical considerations into account in addition, unless the trust's mandate specifically mandates such a policy.
	Many investors and trustees still believe that they are required to maximise financial returns on an investment-by-investment basis to the exclusion of all other considerations. Read carefully, however, the law seems to require trustees to act for the proper purpose of the trust and not for extraneous purposes. As long as the best interests of the beneficiaries are not compromised, trustees may take ESG considerations into account.
	The amendments, while confirming and clarifying the situation would, I hope, encourage investors to engage with companies in which they hold shares. Recommendations from major shareholders will certainly turn a corporation's thinking towards ethical standards. Investors themselves also need a safe harbour in the event that they do not invest or decide to disinvest because a corporation is involved with the commission of crimes against humanity, war crimes or genocide. As long as the investor acts prudently, and in the best interests of the beneficiaries, and as long as returns can still otherwise be maximised and risk minimised, disinvestment from such corporations should surely represent a safe and responsible investment decision. Investors should not have any lingering doubts and fears that they may face civil, criminal or administrative action because consideration of ESG issues was part of their decision-making process.
	The second reason is policy. The amendments are entirely in keeping with the United Kingdom's commitments to corporate social responsibility, as evidenced, for example, in the sustainable development strategy of 2005, the White Paper on international development in 2000, the international convention on social and economic rights, the United Nations Convention on the Rights of the Child, the Kyoto protocol and subsequent international undertakings on global warming, not least those at the recent G8 summit in Japan, and the European Union code of conduct on international arms sales.
	To be consistent with those commitments, the personal accounts system should surely achieve and exceed worldwide best practice in responsible investment. The amendment would enable ethical investment to be part of the strategy of the United Kingdom's largest public pension fund; it would be an imaginative lead to society as a whole. There would be a clear mandate to the trustees and appointed fund managers to engage with companies on environmental, social and governance issues. By contrast, without the provision, the fund, and with it the United Kingdom as a whole, will remain a Goliath in the fight for a fairer world.
	The third reason is financial. There is much evidence that the effective management of environmental, social, human rights and governanceESGissues can have a positive impact on investment reforms and risk management and therefore become a financial benefit rather than a financial cost. It has been demonstrated that ethical good governance and transparent corporate practices can assist in achieving stable returns and long-term profit growth. That has been seen in the sphere of pension funds. A good example is the Co-op ethical fund, which has a more than commendable record among the all-share funds in recent times.
	Of course, socially responsible investment is of more and more significance in the value of the reputation of the individual corporations. Indeed, increasing attention is now being given to the alleged negative part played by some corporations and their foreign investment in fuelling human rights abuses across the world. Examples have been the abuse of workers and sweated and child labour in the clothing industry and the representational damage to some of the clothing giants. Another example has been the controversial part played by some of the oil giants in Burma, Sudan, Africa and Latin America. Zimbabwe has given recent grounds for concern in this respect. There is no need to list the corporations by name; they know very well which they are. There is no doubt whatever that the cost to them of such behaviour will be significant. Responsible investors work with corporations to help them to future-proof their profits by, for example, limiting the negative consequences of poor governance, lax safety standards or climate change for their business.
	Before concluding, I should identify the limits to my amendments. They do not propose that institutional shareholders should have free rein in making investment decisions. They are a focused guide to investors to evaluate ESG considerations when exercising their fiduciary duties to maximise profit. In the context of the rigid guidelines imposed on investors by that fiduciary duty, they simply underline their legal right to take their preference into account in accordance with the written statement of ethical principles.
	The realities of globalisation mean that our choices and decisions affect the lives of people elsewhere in the world more directly than ever before. That is why globalisation makes it imperative that we give our attention to issues that previously too often fell below the moral radar. That is why our investment practices must accordingly change. However, I repeat that both amendments are focused and proportionate to their objectives. They are not mandatory and simply allow investors to take ESG issues into account.
	The vital well-being of our pensionersI take second place to no one in my support for that objectiveshould never be dependent on the violation of human rights abroad, the degradation of the environment, the acceleration of global warming, irresponsible arms deals and corrupt corporate practices. It would be deplorable if it did. I shall listen very carefully to what my noble friend has to say in response to these amendments. I shall do so in the hope and, dare I say, anticipation that he will endorse the need to move convincingly forward. I beg to move.

Lord Skelmersdale: My Amendment No. 113H is grouped with the amendments of the noble Lord, Lord Judd, to whom I listened with great interest and considerable sympathy. As my colleagues in another place have indicated, on these Benches we believe in the need for a proper appreciation of the importance and benefits of ethical investment. It is true that ethically minded and socially responsible funds are not only increasingly common in the private sector, but they are likely to be as profitable as more traditional schemes. However, I noted that the Minister said on the previous amendment that trustees in a corporation will be subject to the obligations put upon the trustees of all pensions firms by law; for example, an ethical policy, as the noble Lord, Lord Judd, said.
	However, I cannot support his amendments unreservedly. His Amendment No. 112ZDA envisages giving the trustee corporation an indication that, if another situation such as that in Zimbabwe were to occur, the corporation should consider its investments and perhaps sell any offending companies. Some very large companies are being named as continued investors in that area. It is not at all unlikely that, if personal accounts were up and running, these would be exactly the sort of companies that the trustee corporation would be likely to invest in. However, this policy would not be easy to implement. Any decision to sell out would be complicated and subjective. Pension savings will, after all, be made through funds, rather than directly in shares in any company or companies. It would be no easy matter to determine exactly where the invested money had gone.
	Additionally, who is to say when the crunch point should come? Many jobholders, if ever they were asked about it, might consider that any investment in Zimbabwe in the past two years or so was unacceptable; whereas for others, that country has only recently gone beyond the pale. These difficulties will be prevalent in every situation. Crimes against humanity are often only clear with the benefit of hindsight, if then. It could thus be too late for an investment decision to have any effect.
	Few international companies manufacture and sell one product. For example, the arms companies have in the past 20-odd years diversified into medical equipment. Trustees would have a considerable burden to maintain a detailed knowledge of the ethical implications of their entire portfolio.
	The second amendment, Amendment No. 112ZDB, also commands my sympathy. I look forward to the results of the consultation that has been promised on this point. I hope that the Minister can provide more information on when it will be available and when he expects PADA to report on the responses. However, I have concerns about this amendment. What an ethical policy consists of could be endlessly debated. Issues could vary from crimes against humanity, to green issues, to support for international development and so on. There is a clear danger that this amendment could create a single concept of what ethical investment means against which all funds would be measured.
	Finally, I turn to my Amendment No. 113H in this group. It summarises my overriding concern with the noble Lord's amendments. Personal accounts are not meant to be a flagship pension fund setting a good example to other schemes; they are intended to be a vehicle for an acceptable minimum level of pension saving and their costs should reflect that. The primary aim of personal accounts is not to hold corrupt foreign Governments to account but to encourage and enable low earners to save for their retirement. If there is no option for ethical investment, some jobholders, who otherwise would have stayed enrolled, will opt out. I hope that PADA and, subsequently, the trustees, fully appreciate the importance of Clause 70(2)(f), which states that diversity ... should be respected.
	I have already discussed an amendment ensuring that that duty will be extended to the trustees. The noble Lord, Lord Judd, almost accused me of poaching; perhaps I am putting that thought too strongly. Without keeping a watchful eye on the costs of investment, personal accounts will fail. A small increase in the administrative costs will inevitably have a serious impact on the final return that a pensioner will receive. Although the investment funds may be rightly sound in themselves, without a cheap and effective organisation managing scheme they will do pensioners no good.
	I conclude that there should be several funds, one of which will be a default fund, another a sharia fund, another an ethical fund that is perhapsI stress that wordbased on UN principles. There may well be more but I would go along with the noble Lord, Lord Judd, in as much as I believe that an ethical fund is a necessity.

The Earl of Sandwich: I rise briefly, as a former board member of Christian Aid and Anti-Slavery International, to support the amendments, and particularly that on ethical investment. I agree with the thrust of the first amendment but I recognise, as did the noble Lord, Lord Skelmersdale, that disinvestment from countries such as Sudan or Zimbabwe is an extremely difficult proposition. How do you disaggregate the elements of an investment in a large or small company?
	I confess that I have always been uneasy in the past when aid givers tread into high finance, but nowadays it is different. Aid organisations and groups such as the Aegis Trust can muster great expertise in ethically and socially responsible investment. That is now becoming mainstream in the City. My former noble friend, the noble Lord, Lord Jopling, whom I hope will speak, is himself a good example because he embodies a combination of those skills.
	I sympathise with trustees who are asked to maximise their investments. I have listened to the arguments about fiduciary duties. However, those should not conflict with an ethical policy; the contrary is the case. These days, no one wants to invest in companies that use the most serious forms of child labour; that has been well exposed recently on Panorama, Dispatches and other programmes. The ESG practices need not now be seen in a category that is far apart from ordinary investment. More effective management of those issues will surely have a positive impact on investment and represent a financial benefit. It is right that the Bill should include an express commitment to those, especially when we are considering such an important public fund. On those grounds, I support the amendment.

Lord Joffe: In supporting both amendments tabled by my noble friend Lord Judd, I shall be brief because my noble friend has dealt comprehensively with all the issues. I will touch on only three matters.
	First, I draw attention to British companies that are operating in Zimbabwe, Sudan and Burma, which have recently been criticised by the Government and across all parties. Despite that, if a pension fund were to disinvest from any of these companies on the grounds of its human rights record, that may be considered to be an unlawful decision of the trustees. Surely UK law should be clarified to allow disinvestment when it is entirely consistent with government policy and when not doing so might be contrary to that policy.
	I listened carefully to the concerns of the noble Lord, Lord Skelmersdale, in this regard, and I think it is important to differentiate between a mandatory and an aspirational or voluntary requirement. It is proposed that trustees should be given a right, which they may or may not accept. Of course, one assumes that trustees will be responsible and make decisions carefully, and one can visualise a situation where a company will need to disinvest. As my noble friend pointed out, the reputational cost to some companies of carrying on in certain fields is so high that the value of the equity in the company goes down and disinvestment is in the interests of the beneficiaries of the pension scheme. Therefore, essentially, all that is being asked for in this amendment is that, if trustees want to disinvest for very good reasons, they should have the right to do so without being concerned about whether there are legal considerations or arguments against it.
	When I referred to companies operating in Zimbabwe, I should have added that I have just received a letter from Anglo American rejecting the criticisms levelled against it and citing facts that support its contention.
	Secondly, I refer the Committee to a report of 7 April by John Ruggie, the UN special representative on business and human rights, entitled Protect, Respect and Remedy: a Framework for Business and Human Rights. Professor Ruggie stresses the importance of Governments taking a wider approach across the parties to business and human rights policies. He points out that many companies take a narrow approach to managing the human rights agenda, which is often segregated within a company's institutional box and kept away from other policy domains that shape business practice, including investment policy. He concludes that this inadequate domestic policy coherence is replicated internationally.
	In the debate on the Pensions Bill in another place, the Government's response to an opposition amendment seeking to sign up to the United Nations principles on responsible investment demonstrated that incoherence in action. The response was that they would applaud trustees choosing to adhere to these principles but that the Pensions Bill was not the place to address such issues, as the fund should be kept as simple as possible with no bells and whistles. I suggest that the fund would not be unduly complicated as a result of permitting the trustees in the default fund to take human rights, environmental and social issues into account in their decision-making process. There was also government concern about additional costs being incurred. Based on my long experience in the life assurance and pensions industry, I think that the costs of an ethical policy are likely to be insignificant in relation to the total costs of what will become a very large fund.
	Finally, in its briefing on the Pensions Bill, the TUC also supports the principle of environmental, social and corporate governance in investment decisionsalthough not necessarily commitment to the UN principles, because it feels that commitment to a single batch of principles which might change in the future may cause problems. The Pension Protection Fund, set up by the Government, also subscribes to these principles. As my noble friend said, the principles are not prescriptive but voluntary and aspirational, so where better to ensure that ethical investment is part of investment policy than in what is likely to become the UK's largest pension fund set up by the Government, and when better than at the beginning of the process?

Baroness Whitaker: In warmly supporting Amendments Nos. 122ZDA and 112ZDB, I declare an interest as a member of Friends Provident's committee of reference, which advises it on ethical investment. I support these amendments because they clear up confusion and move the positive provisions of the Pensions Act 2004 on so that socially responsible investment, with all its gains in stable returns and long-term profit growth, quite apart from the ethical considerations so eloquently set out by my noble friends, can have a proper framework and protection.

Lord Kirkwood of Kirkhope: I shall add briefly to this debate. This is an extremely important subject and has been put very seductively by the noble Lord, Lord Judd, who argued for it passionately. He has done the Committee a service in bringing these amendments to our attention. I know his record; he is passionate about the work of the Aegis Trust. All sides of the Committee would want to recognise and acknowledge the work that it has done. It is exemplary and has been done over many years. The context in which we are discussing these amendments is the better for what it has achieved.
	However, this is not the place to start this debate. Ethical investment is a much wider issue than merely trying to attach it to the fund to which the amendments relate. I would be shoulder to shoulder with noble Lords who have argued in favour of the philosophy behind these amendments when it comes to corporate social responsibility and to requiring investors and the people responsible for investment decisions to be tasked with the long-term global consequences of some of their decisions, but I am frightened by the consequences that these amendments would have on the set-up of these funds.
	I was more in favour of these amendments until I heard Mr Tim Jones, the chief executive of PADA, who made it clear to me, in a way that I had not properly understood, that his members cannot afford anything more than a core, stripped-down scheme. That is the core function of the Bill. The noble Lord, Lord Skelmersdale, put it well, and I concur with his position. Against a background of 50 per cent more people retiring by 2050 and 7 million people in this country undersaving, that must be at the forefront of our mind as we go through this important Bill clause by clause. Even if we get a low-cost, minimal scheme, it will be hard enough to make it successful without taking it into other dimensions. These are not frivolous or bells and whistles issues. I know that people talk about embellishments, but I do not consider ethical investment to be de minimus or in any way a second-order issue, but I do not think that these amendments would enable Tim Jones and his people to design a default scheme that would be able to stay anywhere within the 0.3 per cent costs that we are aiming for. Without that, it might fail, and that is too big a risk for me.
	I hesitate to take issue with colleagues who have spoken, such as the noble Lord, Lord Joffe, who I know knows a lot more about these things than I do, but I feel that including the new clauses in the Bill would be onerous, and not just financially. I give the noble Lord an example of that. My understanding is that if we passed the amendments, we would find it impossible to allow the design of the PADA scheme to include tracker funds. If you go for tracker funds, I cannot see that you could possibly ever guarantee that they were all ethical investments because they are so diverse, by definitionthat is their value. If you rule out access to tracker funds, you take a whole raft of initiatives away from the design and build of the new scheme in a way that must be inimical to the long-term objectives for pensions, which we are all trying to get to work.
	Also, if I were a member of the trustee corporation and the new clauses were in the parent Bill, in primary legislation, I would have a care about legal challenge. It may well be voluntary, it may be a set of standards that we are asking trustees in the new organisation to aspire to, but people who feel disappointed and think that the new clauses are not being properly respected by the trustees would sue. Ultimately, there would be judicial review and the rest. That is absolutely the last thing that the new set of pension provisions that we are putting together needs.
	I am willing to give the Government the benefit of the doubt on the consultation offered. The points made in the other place in the Public Bill Committee were taken seriously by Mr O'Brien, the Minister

Baroness Whitaker: I am very sorry to interrupt the noble Lord, but does he not accept that the provisions are intended to protect the investor from judicial risk? Previously, you could always be summonsed for not putting first the fiduciary responsibility. The provisions allow you to invest ethically.

Lord Kirkwood of Kirkhope: I understand that perfectly well; the noble Baroness made that clear in her speech. I understand that there is value in that; I absolutely understand that there is value in clarifying the law. She makes a powerful point there that I understand. I am arguing a slightly different point, which is that if you are sitting in the trustees' chair and have these tests in primary legislation, if you do not measure up to those tests according to the judgment of someone who does not like what you have done, you could find yourself on the wrong side of a court action stating that you were not properly living up to the expectations of legal provisions in primary legislation.
	The noble Baroness may be right; I may be right; all I am saying is that that is an extra thing to think about. You would need to get lawyers employed if you were a responsible trustee because trust law requires you to do all that. I think that the risk would be that there will be a bureaucratic legal dimension that would not be necessary if we did not pass the amendments.
	Speaking for myself, my heart is with the noble Lord, Lord Judd, but my head is with the noble Lord, Skelmersdale, and, I suspect, the Minister. The noble Lord, Lord Skelmersdale, was absolutely right to say that we need assurances about the consultation. It must be a properly thought-through discussion about exactly what that will entail. That is something that we will want to watch as the Bill goes through later stages.
	I just say to colleagues that I listened to Mr Tim Jones, who has a very difficult and significant policy job to do. His question always is: can his members afford what we are enacting in this House. In respect of the amendments, I do not think that they can.

Lord Young of Norwood Green: I support the amendments in principle, and declare an interest as vice-chair of the Ethical Trading Initiative. I, too, have listened carefully to the debate, and I agree with the previous speaker that there is a bit of heart and head operating in the Chamber. However, I think everyone operates from the same premise that we do not want to undermine the scheme. The reality at the moment is that trustees can take only one decision. They have the fiduciary responsibility, and any departure from that, as we know from a number of court cases that have demonstrated this, leaves them liable to action.
	In the 21st century, there should be an ethical investment option. Ethical investment is alive and well and has a proven track record, so no one wants to introduce a responsibility that would undermine this scheme. However, there is a need to consider these issues seriously, and I hope that the consultation that is being offered will be in-depth and that some attempt will be made to move towards this and embrace these principles.

Lord Joffe: I shall pick up a point made by the noble Lord, Lord Kirkwood, to underline the point made by my noble friend Lady Whitaker that the purpose of the amendments is to avoid litigation in the future. By clarifying the law, you automatically ensure that there can be no further legislation.

Lord McKenzie of Luton: I thank my noble friend Lord Judd for tabling this set of amendments and for the opportunity to debate the important issue of ethical investment. I am bound to say that it is good to have some passion injected into our pensions debates, which can sometimes be quite technical and turgid.
	The wider subject of ethical investment is of course particularly relevant at the moment, and before I talk more specifically about personal accounts and the amendments, I acknowledge the concerns highlighted by my noble friends Lord Judd and Lord Joffe last week about Zimbabwe and will be very clear about the Government's position on British business there. Although, to our knowledge, no British company has acted illegally, it is absolutely right that the companies and their shareholders look hard at how their activity in Zimbabwe may be benefiting the regime. We will work with them to ensure that the regime cannot benefit from British commercial activity.
	We are now in discussions with EU member states with a view to bringing a similar package of concrete proposals for action to the next EU Foreign Ministers meeting on 22 July. These measures might include increasing the number of those on the EU travel ban and assets freeze lists whose actions are contrary to a political settlement, freezing the EU assets of businesses and firms owned or controlled by those on the list, and preventing or making it harder for regime members to attend international events within the EU.
	Against this background of international concern, I also make it clear that we fully recognise the increasing interest in ethical investment both in Parliament and the wider community. As my colleague the Minister for Pensions said recently at the launch of the national ethical investment week, to which he referred at Second Reading:
	If we are to build a more successful, vibrant, modern economy we can no longer afford to view economic success as being in conflict with social and environmental goals. On the contrary these goals must be seen as integral to economic success and the very essence of sustainable development.
	A significant area for ethical investment is pension schemes, and again I assure noble Lords that the Government are sympathetic to the concerns driving these amendments. Increasing numbers of people take an interest in where their money is invested, and it is proper that this should be considered when setting up a new workplace pension scheme on the scale of personal accounts. We should also recognise that ethical investment and sound financial returns are not inevitably in conflict.
	However, we must also bear in mind the primacy of the trustee of any pension scheme when it comes to making investment decisions. I appreciate that the scale of personal accounts will be significantly greater than that of other schemes but, as for other trust-based schemes, the trustee must have the freedom to make the investment choices that are right for the members. To attempt to restrict this freedom would be to treat the trustee of personal accounts differently from the trustees of all other schemes. That said, I believe I can give noble Lords an assurance of the real importance being placed on ethical investment.
	First, it has been noted that the law already requires the trustees of pension schemes to prepare a statement of investment principles that sets out the guidelines which fund managers must follow in investing members' funds. This statement must be made available to members and prospective members and must set out the extent to which social, environmental or ethical considerations are taken into account in the selection, retention and realisation of investments. I should add that this law was of course introduced by the Government in recognition of the importance placed on responsible investment.
	Secondly, following debate on this issue in the other place, Tim Jones, the chief executive of the Personal Accounts Delivery Authority, confirmed that responsible investment will be explicitly addressed in the investment consultation which the authority will undertake later this year. The consultation will start in the autumn and we hope to respond by next spring. I am sure noble Lords will be aware that Paul Myners, the chair of the delivery authority, only last week stated publicly that PADA,
	will consult [on an SRI fund] and if there is a strong demand, as I anticipate there will be for SRI management, then there will probably be an SRI fund.
	I hope that all interested parties will respond to that consultation, as it will of course be considered by the trustee corporation in the development of its statement of investment principles.
	Thirdly, we have tasked PADA with doing some preparatory work on the investment strategy to assist the trustee. In carrying out this work, PADA will draw on research into the investment preferences of the target group, discussions with interested parties and also draw on the expertise of its consumer and trustee advisory committees. As part of that process, and in view of the powerful contributions that have been made today, I am happy to extend an invitation to my noble friend Lord Judd and other noble Lords who have spoken on this issue today to meet Paul Myners and Mike O'Brien for a further discussion of their views on responsible investment. I know that Paul Myners is particularly keen to engage on this issue. I hope that this has clarified for noble Lords the importance that is being placed on responsible investment.
	Let me now turn to the specifics of the amendments themselves. The Work and Pensions Select Committee, Paul Myners, and virtually everyone who has commented on personal accounts have emphasised that to be a success, this must be a simple, low-cost scheme. In its preparatory work on the investment strategy, as in all its work, PADA will be obliged to have regard to the principles in Clause 70, and in particular the principle in Clause 70(2)(d), that the costs of scheme membership should be minimised. Amendment No. 113H tabled by the noble Lord, Lord Skelmersdale, would effectively duplicate this provision, and so I do not believe it is necessary.
	Amendment 112ZDB, tabled by my noble friends Lord Judd and Lord Joffe, and the noble Baroness, Lady Northover, would require the scheme to have a written policy on ethical investment. As I have said, it is not for the Government or indeed any other person to put any specific investment requirement on the trustee. In addition, I have already discussed in some detail the role of the statement of investment principles and the current requirements in relation to that statement. Again, I believe that these would largely be duplicated by the amendment.
	Amendment No. 112ZDA seeks to give the trustee corporation the right to disinvest from investments associated with,
	crimes against humanity, war crimes or genocide.
	In discussing this I should like to give some assurance on what I understand to be the current operation of the law. Noble Lords are correct that there is no such overriding right on the part of trustees. However, I have been assured that there is no reason in law why trustees cannot consider social and moral criteria in addition to their usual criteria of financial returns, security and diversification. I have already mentioned that the trustees of a scheme are obliged to cover in the scheme statement of investment principles the extent, if at all, to which social, environmental or ethical considerations are taken into account in the selection, retention and realisation of investments. Given that regulation 2 of the investment regulations refers to the retention and realisation of investments, we would say that those regulations would already oblige a trustee to state to what extent it makes such investments, and implicitly also why. This is an obligation on trustees, not simply a right to choose whether to disinvest or to sell such interests. Furthermore, the SIP must be reviewed at least every three years.
	Apart from this statutory duty, case law also gives trustees guidance. There is no reason in law why trustees cannot consider social and moral criteria in addition to their usual criteria of financial return, security and diversification. Indeed, it has been observed by commentators in the eighth edition of the Pensions Law Handbookthat if trustees wish to make an ethically acceptable investment which will produce a financial return at least as good as that produced by any other investment, there is no reason why they cannot do so. While, strictly speaking, there may be no overriding right to divest shares held in such interests, by virtue of existing statute law, common law and the consequent combination of obligations and latitude for trustees, in our view trustees are able to act in a similar way without a specific legal right to do so.
	This position applies to all pension scheme trustees, whereas the proposed new clause would apply only to the trustee corporation. It would not be right to impose specific abilities or requirements on that body alone, thereby making its situation unequal to that of other trustees. I therefore hope that, with the offer of further discussions to explore any need to clarify the law on this issue, the noble Lord will feel able to withdraw his amendment.
	I hope that I have made our position on investment absolutely clear: we take responsible investment seriously but we also take seriously the primacy of the trustee over investment decisions in any pension scheme. It would not be appropriate for the Government or Parliament to impose any guidelines that might restrict the trustee's independence in carrying out its overriding duty to members, although government has a role in engendering a climate which fosters ethical investment and in ensuring that legislation does not act as a barrier to those who are committed to this.
	I am grateful to noble Lords for their thoughtful participation in the debate. I am sure that the authority, and the trustees in turn, will wish to consider the representations made. On that basis, I hope that my noble friend will feel able to withdraw his investment and that he will participate in the further discussions that we wish to have, particularly with Paul Myners.

Lord Skelmersdale: Before the noble Lord, Lord Judd, withdraws his investment, to use the Minister's phraseI think he meant his amendmentI should say that I have no intention of pushing my Amendment No. 113H, especially in view of the very strong hint that the Minister has given that there will be a socially responsible investment fund. I wish to goodness that he could be more forthcoming about the various other funds that we all expect the PADA to arrange.

Lord McKenzie of Luton: As I have outlined, there will be consultation on the statement of investment principles. Until it is complete, it is impossible to be clear about the range of funds that may be on offer. It is implicit in all discussions to date that there will, in any event, be a default fund to make sure that the issue of inertia does not operate adversely and is consistent with our approach to auto-enrolment and personal accounts.

Lord Judd: I appreciate my noble friend's considerate and full reply. It was characteristic of his whole approach to his responsibilities, and I welcome that. I hope he will forgive me for saying that the complicated situation, as he honestly described it, is a good reason why we need clarification in the law. It is important that people who carry these heavy responsibilities should be in no doubt about their rights. From that standpoint, clarification is important.
	The other point I wish to make is one with which we have to grapple in life all the time. I suggest, in the best possible spirit, that he perhaps wants to have his cake and eat it. Supporting ethical investment and maximising return as a paramount consideration are not always reconcilable aims; there is sometimes a contradiction and you have to make a choice. That is a hard-headed point if ever there was one.
	I thank the noble Baroness, Lady Northover, for putting her name to the amendment. She was valiantly here until a very late hour the other night but cannot be here today. I know how much she is behind the amendments. I also thank my noble friend Lord Joffe. He was my long-suffering chair when I was director of Oxfam. The fact that we remain friends says a great deal about his generosity of spirit and patience. He brings a lot of other highly relevant professional experience to these matters. I also thank all those who participated in the debate. All of them have very real experience to offer.
	At this point it is always tempting to look at all the points from one's initial remarks that have not been answered and to go over them again. That is an abuse of the Committee. I simply hope that the Minister and others will look carefully at all the arguments. I shall pick up just a couple of them.
	The noble Lord, Lord Skelmersdale, made a point about putting on people new obligations which would be difficult for some of them to fulfil honourably. That was well answered by my noble friend Lord Joffe, who again emphasised that this is not obligatory; it is permissive. Therefore those who want to pursue these matters, and watch and monitor them in more detail, will feel that they have the authority of the law behind them. My noble friend Lady Whitaker supported that, pointing out, in response to the noble Lord, Lord Kirkwood, that the amendments would be a protection for trustees and not an added burden.
	I was delighted to know that I have at least the heart of the noble Lord, Lord Kirkwood, even if I do not have his head. I hope he will forgive my saying so, but I think he is mistaken about this being simply a hearts-and-heads argument. In the context of the situations with which we are dealing, there may be very adverse consequences for investors if they pursue exploitation. It may lead to a violent situation in the countries concerned, which will disrupt all that those investors are trying to invest, achieve and do there. It is misguided and mistaken to say, as people too often do, that one argument is from the heart and the other is from the head. Sometimes it seems that the heart is more hard-headed than the head. That point should be taken more seriously.
	The noble Lord, Lord Kirkwood, also referred to the size of the challenge. It is a huge challenge for the future: a declining productive labour force and an increasing number of people dependent in old age. If we are a civilised society, we must struggle to ensure a decent, full life for people, with greater life expectation and the rest. However, I simply cannot accept that, in answering that challenge, we should ever be seen even indirectly to condone the securing of people's well-being through the exploitation of women, to the breakdown of their health, at the cost of miscarriages, long hours, awful working conditions, child labour, premature death and sweated labour. How could it be acceptable in a civilised society that we achieved our well-being at that price? It has to be tackled.
	The Minister refers to our current obligations under various conventions, and I am glad that he takes them seriously. We have obligations under conventions, but it is in new legislation such as this that we have a chance to put some muscle into the rhetorical commitment. If we dodge that, we will bring the whole concept of making conventions into disrepute.
	My noble friend was very conciliatory in his reply. He talked about further deliberations and consultations. I think he suggested that he would welcome my coming and talking more about the issues at stake here. If there really is an opportunity to do that before Report, I shall very willingly withdraw my amendment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 67 agreed to.
	[Amendment No. 112ZDB not moved.]
	Clause 68 agreed to.
	Clause 69 [Functions]:

Baroness Noakes: moved Amendment No. 112ZE:
	Clause 69, page 34, line 5, leave out the Secretary of State or

Baroness Noakes: I shall speak also to the other amendments in this group. They are probing amendments, based partly on a briefing from the Law Society of Scotland, and they focus on the role of PADA. Under Clause 69(1)(b), PADA is to advise and assist both the Secretary of State and the Pensions Regulator in connection with compliance. My Amendment No. 112ZE deletes the Secretary of State. It is quite unclear to me why the Pensions Regulator should need PADA to advise it on compliance. The regulator is going to have to devise its own approach to compliance, and I am not at all clear why PADA will know anything more about that than the regulator. However, I am even more unclear about why the Secretary of State should be involvedhe is not going to run the compliance regime. This is just a recipe for too many cooks spoiling the broth.
	Under Clause 69(1)(a), PADA has the functions of assisting and advising the Secretary of State in connection with setting up the personal accounts pensions scheme, which is what we would expect. However, Clause 69(3) says that the advice given to the Secretary of State can include assistance and so on to the trustees of the scheme. Amendment No. 112ZF deletes that for two reasons. First, it explores why PADA has to advise the Secretary of State in order to advise the trustees. In other words, why can it not do so directly? Secondly, it explores whether this blurs the independence of the trustee corporation whose board alone will be responsible for decisions made. The Secretary of State will have no role in those decisionsor at least he should notand to channel advice through him is to create the murkiest of water.
	Amendment No. 112ZG makes it clear that PADA's functions in relation to financial products are strictly limited to advice to the Secretary of State in connection with establishing the personal accounts scheme. We do not want to see PADA morphing into some kind of all-purpose advisory body getting involved in different kinds of savings and pensions products; it should be focused solely on personal accountsthat is what its title says it is, a personal accounts delivery authorityand nothing else.
	Amendment No. 112ZH replaces corporation's with Authority's in Clause 69(7). As far as I can see, the Bill refers to PADA as the Authority throughout, while the corporation is used in Chapter 4 to refer to the trustee corporation. I think that subsection (7) is supposed to be about PADA rather than the trustee corporation, and that is what my amendment seeks to achieve. I beg to move.

Lord McKenzie of Luton: I thank the noble Baroness for tabling this group of amendments because they give me the opportunity to provide the Committee with some detail about the governance arrangements for delivering the reforms set out in the Bill, and to put into context the relationships between the different organisations involved and their roles.
	The reform programme, known as the enabling savings retirement programme, is one of the Government's major programmes. It covers the introduction of automatic enrolment and the mandatory employer contribution, the implementation of personal accounts and the communications to support these reforms.
	There are four strands to the programme. My department is responsible for the development of policy and delivery of the necessary legislation, both primary and secondary. The authority is responsible for the delivery of the personal accounts scheme, which it will hand over to the trustees to operate. The Pensions Regulator is responsible for compliance with automatic enrolment and the payment of contributions. Finally, there is joint responsibility across those organisations for the communications strategy for individuals, employers, the industry and intermediaries.
	Clear governance structures are essential in managing a programme of this scale. There are interdependencies, and we have established a cross-government programme board with overall responsibility for ensuring that delivery is progressed cohesively by the organisations involved. This includes individuals from the delivery organisations. As part of that governance, it is of course essential to have a senior officer responsible for the delivery of the whole programme. In view of its responsibility for these public policy reforms, this post is held by my department.
	Clause 69 sets out the authority's functions as part of this programmeto advise and assist with the establishment of personal accounts, including advising and assisting the trustees of that scheme; and, as required, to advise and assist with arrangements in connection with automatic enrolment.
	I can assure Members of the Committee that the authority's primary task is the establishment of the personal accounts scheme which it will hand over to the trustee. However, there will be a period during which the authority will need to work alongside the trustee to assist and facilitate the transfer of the infrastructure and processes developed for the scheme. Removing subsection (3), as Amendment No. 112ZF would require, would prevent the authority providing any help to the trustee. I cannot see how this could in any way be desirable. Alongside this, the authority may be required to assist the Pensions Regulator, within the context of the programme, under the overall control of the Secretary of State. That is why subsection (2)(b) is drafted as it is and why I cannot accept Amendment No. 112ZE. We should not close down opportunities for all parties in the work programme to work together, within a clear governance structure, to deliver our ambitions for these reforms.
	Amendment No. 112ZG focuses on the authority's remit. I confirm that the authority will have no legal authority to undertake any wider activity, including providing financial products, beyond the scope of the personal accounts scheme.
	I hope that these explanations have been helpful in establishing why Clause 69 is as drafted. I therefore urge the noble Baroness to withdraw the amendment. I note what she said about Amendment No. 112ZHshe is absolutely right and we are happy to support it.
	This is a huge project; it is important that we provide opportunities for effective communication and assistance, where it is appropriate, between the key players within a structure. That is what the clause seeks to do. It is that interrelationship which will make a success of the scheme.
	The noble Baroness may want me to cover some points that she feels I have not; if so, I will try to do so.

Baroness Noakes: I am still a little unclear about the treatment of the trustee corporation in this clause compared with that of the regulator. When will the trustee corporation be set up? I am not clear when it becomes a player in its own right as part of the process. Secondly, if the trustees of the scheme are to get advice from PADA, why cannot we draft that directly into Clause 69(2)(a) rather than via the Secretary of State in subsection (3), which was what my probing amendment was trying to ascertain?
	Will the Minister also consider whether continuing to call the authority PADA is right? Its remit has changed since the Pensions Act 2007 to include a significant role in relation to auto-enrolment, which is nothing to do with personal accounts.

Lord McKenzie of Luton: The noble Baroness's second point was about the role of the Secretary of State in communicating with the trustees and why PADA could not do that directly. I am sure that there will be circumstances in which PADA will do that directly, but we must bear it in mind that the Secretary of State is the settlor of the scheme and there will need to be communications in making sure that when the scheme order is brought forth, it covers everything it needs to.
	When will the trustee corporation be set up? The trustee corporation will go live in running the scheme at the point when the infrastructure is in place and PADA has done its work in putting together the totality of the scheme. There will be a transfer to the trustee corporation, which, as we have discussed previously, we expect to take place during 2012. The trustee corporation will be in existence prior to that, because it will have to adopt a statement of investment principles, for example, as we have just discussed. The precise timing of its being set up and of the appointments of at least the first trustees has not yet been finally locked in place, but one can see the time frame within which that must take place. We should perhaps refer to it in future as the authority rather than PADA, which I hope will deal with the point that the noble Baroness raised. I hope that that is clear.

Baroness Noakes: I will read carefully what the Minister said. I am still in a little fog as to why the trustees cannot be drafted directly into Clause 69(2), notwithstanding the fact that the Secretary of State is the sponsor. I can see that the Secretary of State needs advice from PADA in relation to the schemeI have no problem about thatbut why the trustees are not advised separately, I do not really understand. However, I will read what the Minister has said and consider it between now and Report. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 112ZF and 112ZG not moved.]

Baroness Noakes: moved Amendment No. 112ZH:
	Clause 69, page 34, line 19, leave out corporation's and insert Authority's
	On Question, amendment agreed to.
	Clause 69, as amended, agreed to.
	Clause 70 [Principles]:

Baroness Thomas of Winchester: moved Amendment No. 113:
	Clause 70, page 34, line 23, at end insert and the Authority must exercise an overriding duty to act in the best interests of future members and, from 2012, members of the scheme

Baroness Thomas of Winchester: The amendment is in the names also of the noble Lord, Lord Oakeshott, and the noble Baroness, Lady Greengross, who want very much to be associated with it. It is a simple, probing amendment which would give PADA a clear focus on its core activity. The authority, as the Minister has said we should call it, is given in Clause 70 no fewer than six broad principles under which to work. It is important that it does not lose sight of its main purpose, which surely should be to act in the best interests of members and future members of the scheme. Giving PADA an overriding duty would help ensure that if there was any conflict between the principles outlined in the Bill, it would be clear where PADA's duty lay. It would also give an important layer of security to scheme members.
	When the consumer organisation, Which?, carried out market research into pension provision, what people said they would trust most was an independent body such as that recommended by the Turner commission. If they knew that such a body was to be set up with a clear, overriding duty, such as that in Amendment No. 13, to look after their interests first and foremost, rather than with at least six different principles and no one overriding principle, I think that I know which they would prefer.
	It is stated in the Explanatory Notes to the Bill that the six principles are matters to which the authority will have express regard. That may be a term of artI am very ignorant about terms of artbut what exactly does it mean?
	In responding to the amendment, the Minister will probably say that PADA has to get the balance right between employers and other qualifying pension schemes and that an overriding objective for PADA is therefore undesirable. However, that is a matter for debate. It is entirely possible that PADA finds that its plans for personal accounts conflict with the need to encourage participation in qualifying schemes. Minimising the adverse impact on qualifying schemes might dilute the impact of personal accounts on the target group. Others would argue that getting the balance right between the new scheme and the broader pensions industry is the business of the Pensions Regulator and not that of PADA. But whatever reply the Minister gives, it is important that we have this debate now so that we can be clear what PADA's main objective is. I beg to move.

Baroness Turner of Camden: I support this amendment, although I had assumed that the authority had this duty anywayto look after the best interests of members. However, as the noble Baroness points out, it does not actually say that in the section of the Bill dealing with principles. I see no reason why it should not be stated in the Bill, as she suggested.

Lord Skelmersdale: I rather wonder whether the noble Baroness, Lady Thomas of Winchester, regrets the absence of her noble friend Lord Oakeshott. I have to say, with no disrespect to her, that I rather regret it.
	Even though this is a probing amendment, I cannot support it. From a narrow point of view, it appears entirely sensible: the trustees will, by trust law, have to consider the best interests of the membership. So why not the authority, as we have to call it now? That ignores an important difference between the two bodies; the trustee corporation is specifically set up to handle personal accounts and only personal accounts. In contrast, the authority is being established not only to set up personal accounts but to give advice and assistance to the Secretary of State on the proper functioning of auto-enrolment in general. On these Benches, we are very much aware that personal accounts, while better than the complete lack of provision currently available for many in the target group, are considerably less generous than the majority of private pensions that we are hoping will qualify for auto-enrolment. It would therefore be in many cases counterproductive and deeply inappropriate for the delivery authority to promote membership of personal accounts ahead of membership in other qualifying schemesa point that I sought to make a little earlier in our debates this afternoon. Yet that is what this amendment could lead to.
	It is cheaper to administer a large scheme than a small scheme. Given the impact that administrative charges will have on the eventual return, it will certainly be in the interests of members with personal accounts for the authority to engage employers to use personal accounts rather than other qualifying schemes. Your Lordships may consider that to be rather reductio ad absurdum, and perhaps it is, but it highlights effectively my wider point that we should not allow the authority to establish a nationalised pension system. It is to manage the implementation of auto-enrolment. I believe that this amendment would add nothing to that duty and might very well hinder it instead, which we do not want to happen.

Lord McKenzie of Luton: I start by saying that I am delighted to see the noble Baroness involved in this, as she has been involved so ably in lots of other pieces of legislation that we have debated recently.
	Clause 70 requires the authority to consider a number of guiding principles in carrying out its work; these principles provide the framework within which the authority will undertake its functions and deliver its objectives. I fully agree with noble Lords that the interests of future members are of central importance in the set up of personal accounts. The principles and other measures in this Bill provide a focus for the design of the personal accounts scheme. That focus is on moderate to low earners without access to good-quality workplace pension provision. The principles and other measures in this Bill already ensure that the authority takes account of those core matters which will be important to the prospective members of the schemethose in the target group. This is why there are principles covering the need to encourage and facilitate participation, minimise costs, take account of members' preferences in making decisions about investment choice, and respect diversity. All these matters are likely to be of prime concern to potential members of the scheme. However, noble Lords should keep in mind that the authority is designing and setting up the scheme as an integral part of our wider ambitions for these reforms. The personal accounts scheme is being designed to fill a gap in the current pensions market and will complement, rather than replace or undermine, other good-quality pension provision.
	While the interests of prospective members of the scheme are important, they are not the only consideration. The authority must also have regard to those other matters that are fundamental to the success of the reforms. Those include, for example, the impact on employers and on the broader pensions industry. I cannot, therefore, agree that the authority should have one overriding duty. It is vital that the authority gets the balance right between the needs of the personal accounts scheme and its future members, the overall impact on employers and the impact on the broader pension industryincluding members and prospective members of other qualifying pension schemes.
	The authority has established a consumer representative committee and has launched an extensive strategic and targeted customer insight and research programme. These measures will ensure that it has an accurate understanding of the needs of those who are likely to be members of the scheme, and that relevant processes are thoroughly tested.
	Finally, on the point about members' interests after 2012, I remind Members of the Committee that, once the scheme is operating, the trustee corporation, as with any other trust-based scheme, will have a duty to act in members' best interests. I hope that that has helped the noble Baroness.
	It is not simply a matter of the authority complying or not with the principles. Clause 70 requires the authority to have regard to the principles as it carries out its functions under Clause 69. It cannot choose to not comply with one or more of the principles. Its statutory duty will be to have regard to the matters articulated by the principles in everything that it does. Inevitably, in considering the principles, there will at times be competing priorities. However, the authority will need to balance and make judgments across the set of principles to reach conclusions that can provide the best solution in the circumstances. Depending on the matter under consideration, the authority may have good reason to give one particular principle more sway than others, but this is not the same as saying that it has not complied with the principles. I hope that, with that further explanation, the noble Baroness will be satisfied and feel able to withdraw her amendment, and I hope that it also satisfies my noble friend Lady Turner.

Baroness Thomas of Winchester: I am grateful to the noble Baroness, Lady Turner, for her support and to the Minister for his kind words. As the noble Lord, Lord Skelmersdale, knows, I have my L-plates on for this debate, but I was always going to move this amendment, not my friend Lord Oakeshott. I thank the Minister for his words of elucidation. I found them extremely helpful. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Skelmersdale: moved Amendment No. 113A:
	Clause 70, page 34, line 25, after in insert existing

Lord Skelmersdale: I speak to a larger group of amendments than usual: Amendments Nos. 113B, 113D to 113F, 113HA and 113M. My amendments are reasonably clear. They tweak the principles under which the authority will operate to ensure that it does not inadvertently do more harm than good, or even less good than it otherwise might.
	As I said previously, I remain acutely aware that the authority is, despite its name, not limited to the establishment of personal accounts. Although setting up personal accounts is an important part of its duty, it will also have an equally importanteven criticalrole to play in establishing a landscape where saving for your retirement is more common at low incomes, whether through personal accounts or not.
	Amendment No. 113HA sums up the thrust of our concerns quite well, especially in its sub-paragraph (iv). The Government's and the authority's overriding aim must be to increase total savings. It must not be considered an acceptable outcome if the existing pot of savings is merely redistributed more widely. If this existing pot does not expand, the Bill will have failed, and failed dismally. To prevent that happening, my amendments seek to ensure that the authority actively seeks to prevent the basic levels of employer and employee contributions becoming in any way the accepted norm across the industry.
	As we have said many times, and as Amendments Nos. 113A and 113D highlight, existing pension schemes tend to offer considerably more generous terms than personal accounts will. These schemes need to be fully appreciated by the authority, and membership into them should be encouraged. Amendments Nos. 113B and 113E make a slightly different point. It is likely that some existing schemes will not make the qualifying criteria but would still result in better retirement income than personal accounts. For example, the Tesco pension scheme would fail the qualifying test because workers are auto-enrolled only after a year with the company. It is not beyond the bounds of possibility that a similar company might comply with auto-enrolment into personal accounts, but keep its more generous scheme running in the hope that workers transfer to the better scheme when they become eligible for it. As the Bill is drafted, it will be a breach of employers' duties for them even to point out the existence of their non-qualifying but more generous scheme. It will also be impossible for employees to port their personal accounts money into a firm's much better scheme after a year or so in personal accounts. What price, then, the very successful portability arrangements of my noble friend Lord Fowler that even this Government have improved?
	The pensions market is a highly complex and frequently innovative place. The authority must have the flexibility to use common sense when weighing up whether workers are being materially harmed by remaining in non-qualifying schemes rather than being shunted willy-nilly into personal accounts. The authority should focus on giving low earners who have no access to a pension scheme the opportunity to start saving. The Minister will no doubt say that there is no intention that it should ever broaden its remit into attempting to break into the pensions market for more affluent customers. Unfortunately, such a Hansard reassurance is in no way comparable to primary legislation. Amendment No. 113F would put the safeguard in the Bill.
	Amendment No. 113M seeks to improve public scrutiny of the authority by ensuring that its compliance with the Clause 70 principles is published. It would also throw up any inherent contradictions in the principlesparagraphs (d) and (f) in particular could be mutually exclusive. I beg to move.

Lord McKenzie of Luton: Clause 70 goes to the very heart of our ambitions for these reforms. It captures in legislation those matters which have shaped the development of our policy, and which must guide the authority as it moves forward with implementation.
	I know that we all support the goal of more people saving for retirement, more people contributing more for longer and, ultimately, higher incomes in retirement. Equally, we know that to achieve these aims we need to address that combination of individual inertia and poor commercial viability which has resulted in large numbers of moderate to low earners not saving enough for their retirement.
	Amendment No. 113F would alter the principle at Clause 70(2)(d) to require the personal accounts scheme established under Clause 58 to be aimed at a target group. The Bill is drafted to provide the legislative framework to deliver a scheme focused on the target group of moderate to low earners who do not have access to good quality workplace pension provision. However, the Committee will appreciate the difficulty of achieving a precise legislative definition of a target group that will stand the test of time. Instead, our approach is to achieve the same goal by setting the scheme a clear focus through the unique features of the contribution cap and prohibition on transfers, and the requirement on the authority to design a scheme within the framework of the principles. The authority fully understands this. When Tim Jones gave evidence to the committee of the other place, he made clear the authority's role, saying:
	It is our job to address that target market.
	Amendments Nos. 113A, 113B, 113D and 113E seek to broaden the scope of the principles requiring the authority to have regard to all existing schemes. I make clear that the personal accounts scheme is not being introduced to replace good quality pensions. Instead, it will be an additional pension scheme focused on the target group of moderate to low earners, which will sit alongside other schemes in the pensions market. That is a core ambition of our reforms.
	The amendments would broaden the scope of the principles beyond the pension provision that is defined as qualifying in Clauses 15 to 25. They would mean that, in designing personal accounts, the authority would be required to have regard to all existing schemes. That could include schemes that do not meet the minimum standards that we consider important in providing for a reasonable income in retirement. That cannot be right, and that is why it is appropriate to specify qualifying schemes in the principles.
	I share the noble Lord's wish that the private pensions industry, which works well for many millions, should be allowed to flourish. We want to preserve good quality existing workplace pension provision, much of which offers greater member benefits than the minimum standard prescribed by the reforms.
	Amendment No. 113HA seeks to include a new principle for the authority about the overarching ambitions of the reforms. Our ambitions for the reforms are clear; more individuals saving and more pension contributions. However, that should not be expressed as a distinct legislative principle for the authority, as Amendment No. 113HA seeks; rather it is part of the rationale behind the Bill and the pension reform programme.
	As such, it is for the DWP to monitor the likely impact and evaluate the extent to which our objectives for the reforms have been met. Already, we have an extensive programme of research and data collection to inform this. We are tracking employers' and individuals' attitudes and responses to the reforms, we are continuing to develop our evaluation strategy in consultation with external stakeholders and we expect a full evaluation to be undertaken after the reforms have bedded in. Much of the research and evaluation will be publicly available, and will provide opportunities to examine the impact of the reforms on pension saving and the wider pensions market.
	Amendment No. 113M would insert a new clause requiring the authority to include in its annual report a report on how it has complied or otherwise with the principles set out in Clause 70. During the debate on the principles in the other place, my honourable friend, the Member for Warwick and Leamington, explained that the authority's annual report will provide detail on the delivery and performance of its business, which will include information on how the principles have been considered during the year. Therefore, we do not think that this needs to be enshrined in legislation. I can also confirm that the authority's forthcoming annual report for the 2007-08 financial year states that future annual reports will include such information.
	In closing, we take very seriously our responsibility in ensuring that the reforms achieve our aims. I believe that the measures in the Bill, including the principles as they are drafted, provide both the framework for delivery and a framework against which success will be assessed. I hope that I have been able to reassure the noble Lord that we share the ambitions behind the amendments, but that there is no need to amend the existing drafting of the Bill to achieve those aims. Accordingly, I hope that the noble Lord, Lord Skelmersdale, will feel able to withdraw his amendment.

Baroness Hollis of Heigham: Before the noble Lord, Lord Skelmersdale, responds and decides what to do with his amendment, perhaps he can help me on a couple of questions. I listened carefully to him and to my noble friend. I am particularly puzzled by the implications of Amendment No. 113F. Like the Minister, I share the objectives expressed by the noble Lord, Lord Skelmersdale, that we are seeking to target lower income people who are currently not in saving schemes to come into a very simple, stripped down scheme and to get people to save who otherwise would not. I do not think that there is any dispute between us on that.
	I do not understand why the noble Lord seems to be suggesting, despite the remarks of his noble friend Lady Noakes on previous occasions about how we always assume that employers are unscrupulouson this side we always distance ourselves from such allegationsthat unless something like this amendment is in the Bill, employers will close down better, more generous, contributory schemes and focus the conditions of personal accounts on people who are better paid than the lower paid and who are already protected in schemes. In other words, the noble Lord seems to be worried that the employers will use the arrival of personal accounts effectively to dilute their pension promise.
	Is that what the noble Lord is worried about? If so, he seems to be confirming the allegations of the noble Baroness, Lady Noakes, that there may or may not be unscrupulous employers. If that is not his allegation, his worry or his concern, why would any employer or employee seek to move to a personal account with a 3 per cent contribution on only half median earningshalf the salary rangecompared with the conventional DC scheme of, on average, a 6 per cent contribution on the full salary range?
	If we are not to end up with two schemes within a companyone for the higher paid and one for the lower paidhow does the noble Lord overcome the problem of someone who starts on fairly modest earnings, perhaps on the shop floor, and then ascends to office management or supervisor or whatever? Does the noble Lord expect that person to go from one scheme to the other? If so, they will pay a very high cost in terms of what happens to the old personal account scheme that will be frozen when they have to move to a new DC scheme, given the refusal to allow any portability between the two schemes.
	What is the noble Lord actually afraid of? Who does he think will warp or manipulate the system? Why would employers who were willing to continue with a decent DC scheme not wish to do so? Why would employees wish to move from one scheme down to the other? What happens to the occupationally mobile?

Lord Skelmersdale: In response to the final remarks of the noble Baroness, Lady Hollis, I am interested in employees who move up the savings scale, not down it. In other words, as I said in my introductory remarks, I can see absolutely no reason why an employee cannot, as the noble Baroness said, start on the shop floor, work there for perhaps a year or two and be auto-enrolled into personal accounts, because they are too young to join the main scheme. Then, perhaps because they have a quickness of intellect or whatever, they might be promoted to a substantially higher position and move into the firm's qualifying scheme. At that point, there is a tiny level of investment in the personal account, which essentially is frozen, until, possiblyI repeat, possibly2017. I have said all along that I should like such amounts to be transferable into the firm's qualifying scheme. Although the noble Lord said that I am being a little previous, and he does not like my suggestion at the moment, I shall keep making those remarks, because eventually, with a bit of luck, I might get through to him and other Ministers in the Department for Work and Pensions.
	I can tell the noble Baroness that I am also worried not only about levelling downwe discussed that on previous amendmentsbut in Amendment No. 113F I am worried about crowding out, which is a slightly different way of looking at things. I do not want personal accounts to crowd out good schemes, which is a possibility. The Minister's remarks

Baroness Hollis of Heigham: That is a crucial point. The noble Lord says that he does not want personal accounts to crowd out; in the abstract, they cannot crowd out anythingpeople have to take action. Who does he think will permit a personal account to crowd out a good scheme other than an employer, presumably? He seems to be suggesting that employers will level downthat is what crowding out means.

Lord Skelmersdale: No, it means two things. Personal accounts can, and perhaps will, crowd out non-qualifying schemesthat is perfectly obviousunless the schemes can be so tweaked, as I put it earlier, to make them qualifying. The system allows that; by definition they will be crowded out. I do not quite see what the noble Baroness is getting at; perhaps she will take me aside in her inimitable way later if she does not want to pursue the point now.
	If I were sitting a university oral, I would, from what the Minister said, get somewhere around half marks: he likes the idea in principle of a lot of what I have been saying but he does not like the actual formulation of the amendment. Fair enough; I will certainly not pursue any of this today. I am slightly surprised by his remarks on Amendment No. 113HA. He said that the four qualifying principles should be the province of the DWP. I will have to think further about that. He also repeatedI was delighted to hear thiswhat his honourable friend said in another place; that is, that the annual report will include compliance, so that does not need to be in the Bill. It would be an awful shame if we suddenly found that such compliance was not in the annual report or the Bill. However, I am not in the mood to divide the Committee so the Minister can relax.

Lord McKenzie of Luton: We have had fascinating exchanges on qualifying schemes. There are provisions in the Bill to enable schemes that are not qualifying to be easily converted into qualifying schemes to permit auto-enrolment. That is the point; we want schemes to be at least as good as the minimum that the Bill provides for. We cannot stop employers having two schemes and different arrangements for individuals but we want to ensure that schemes are qualifying schemes and that they are good quality schemes that provide for contributions that are at least at the level of those identified in the Bill for personal accounts and auto-enrolment.

Lord Skelmersdale: First, they may not want to do that and, secondly, there is the small matterin fact, it is rather largeof qualifying earnings. They may never get to be qualifying, however much they tweak. I understand what the Minister said on a previous Committee daythat PADA will bend over backwards to make as many existing schemes as possible qualifying schemes. None the less, some will inevitably fall through the net.

Baroness Hollis of Heigham: The schemes that will fall through the net are those that are less beneficial to employees than personal accounts. In other words, crowding out is crowding out only where those schemes fall below the level of provision that personal accounts offer, however you assess thatit can involve basic earnings, qualifying earnings and the like.

Lord Skelmersdale: No, I do not think that that is right. There may be all sorts of reasons why, even with the tweaking that I was talking about earlier, a scheme cannot reach the standard for qualification. I have absolutely no doubt about that. I shall not pursue this argument now, as I do not see that there is any future in it. Therefore, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 113B not moved.]
	[Amendment No. 113C had been retabled as Amendment No. 113HA.]
	[Amendments Nos. 113D to 113F not moved.]

Baroness Noakes: moved Amendment No. 113G:
	Clause 70, page 34, line 33, at end insert and initially based on an annual management charge of no more than 0.3% per annum

Baroness Noakes: This amendment adds to paragraph (d) of Clause 70(2) a rider designed to ensure that a personal account scheme will be set up with initial costs of not more than 0.3 per cent. This is a probing amendment, moved more in hope than expectation, in order to get the Government to put on the record the current position on costs and charges.
	The Pensions Commission, much to the surprise of the financial services industry, said that personal accounts could be delivered for a 0.3 per cent annual charge. The Government, in their 2006 White Paper, Personal Accounts: A New Way to Save, said at paragraph 4.5:
	Our analysis indicates that in the long term it would be possible to run personal accounts at a charge of, or possibly even below, the 0.3 per cent level. In the short term, charges will be comparable with the Commission's estimate when this is adjusted to take account of the likely need to finance the scheme over a shorter timescale, and the need for a compliance regime.
	What are the Government's estimates of the cost of a personal accounts scheme when expressed in annual percentage charge terms? The Government clearly had some figures available in December 2006. I assume that they are updating those, so could we have the updated view? In particular, the December White Paper went on to refer to 0.5 per cent as the initial figure. Is that still the figure for charges in the early years or might it go even higher? My noble friend Lord Skelmersdale has already referred to that, as some people are talking about higher figures. As the charge levels have a large impact on the net return in retirement, the Minister will be aware that this is an important area.
	Will the Minister say what assumptions will be made about the period over which the scheme needs to be financed? The paragraph from the December 2006 White Paper that I quoted a moment ago referred to the Government adjusting the Pensions Commission's costs to take account of the likely need to finance over a shorter timescale. Perhaps he will put on the record what that timescale is, what amortisation period the Government are assuming and what interest rate they are using. I shall be looking to the Minister to provide some more detailed analysis of the approach to and quantum of costs.
	On our fourth Committee day, we had a brief discussion about the evolution of the personal accounts scheme in the context of whether PADA would deliver the scheme on time. We will be returning to that issue on Report but today I am concentrating on the costs of the scheme in both absolute and relative terms.
	I have not been able to trace much information about costs, although the emerging smoke signals are that it is proving to be expensive. PADA is spending 36 million in this financial year, having spent 13 million up to the end of the last financial year. That is 49 million and we are still a long way from 2012. We do not know what that is being spent on, but there are stories of armies of management consultants moving in in large quantities by the day. That fills us with some dread of what the total bill will be.
	Mr Tim Jones, the chief executive of PADA, gave evidence to the Work and Pensions Select Committee in another place on 7 July. Almost the only specific thing that he said was that the operational costs of the early years were large. I expect the capital costs will also be pretty huge, but it is possible that those costs will be translated into annual costs by PFI-type service contracts.
	A prior information notice was issued last month in connection with a procurement exercise, but I noted that the cost boxes were left blank. Unless the Minister can point me to some information on costs, we might have to conclude that we are in an even worse situation on this Bill than we were when we debated the Identity Cards Bill. The Minister may recall that the paucity of information available then led to a requirement being introduced into that Bill for six-monthly cost reports to Parliament, but we had much more information then about the costs of identity cards than we have been given to date on personal accounts.
	I am not yet going to be defeatist on this subject because I hope that the Minister will be able to give us some information on cost levels in absolute terms and in terms of the annualised rate of cost per member. I hope that the Minister will be prepared to share with the Committee, for example, the membership assumptions on which cost percentages are based and say whether there are trigger points at which step changes in costs occur, especially as the number of potential members in the personal accounts scheme has shifted to a lower level since the emphasis of this project shifted towards auto-enrolment and away from personal accountswell, not away from them, but incorporating a significant auto-enrolment element.
	I know that the Minister will be told by his officials to hide behind commercial confidentiality, but I would like him to reflect carefully on whether that is the correct thing for him to do. The evidence given by Mr Tim Jones on the shape of the procurement and what we see from the prior information notice and its accompanying discussion note suggest that there will be multiple contracts for different elements of the scheme of personal accounts, so giving aggregate cost dataand that is all that I am asking for at this stagecannot possibly compromise individual procurements.
	Will the Minister say what role the DWP is playing? It is all very well setting up a quango to do the detailed design and procurement, but if things go wrong the mess will end up on the Government's doorstep. Do the Government have firm control over what is happening? What oversight processes are in place? For example, how often are progress reports, including costs estimates, submitted to Ministers? The Committee will be concerned that this is not another runaway project in the making, so what can the Minister say to reassure us on that?
	Lastly, will the Minister say something about the charging for compliance costs, which clearly have to be taken into account when arriving at the overall cost levels? When we discussed this on an earlier day in Committee, the Minister raised the prospect of the levy being used to cover compliance costs because of the difficulty of separating out work on compliance with this Bill and the other work of the regulator. Can he expand on that? As he will know, the corporate sector, which has to suffer the high levy payments, will be resistant to any suggestion that its levy should be used to cover anything else.
	I said earlier that this is a probing amendment, but I should say to the Minister that we regard this as an important topic, so I hope that he will be able to reply with specifics, not simply fine words. I beg to move.

Lord Kirkwood of Kirkhope: I support this amendment. It is elegantly worded and has been put in a positive way. I am glad that it is a probing amendment because the Committee should be reluctant to put detailed figurespercentages and fractions of percentagesin primary legislation. The annual management cost is at the heart of this scheme and is crucial to its success. I cannot think of another way of signalling the Government's seriousness about enforcing these levels of charges. I hope that the Minister will say that they will be enforced.
	I cite the example of stakeholders, which was in many ways a failure in terms of the number of empty accounts and the rest of it. However, I was persuaded that the stakeholder process forced the industry to get serious about constraining costs and charges. The Government were absolutely right to do that then and they are absolutely right to do that here in this way. I like the fact that the amendment contains the important word initially, because circumstances may change; if we were seriously threatening to put this into primary legislation, we would need a little flexibility. Those who are watching the progress of this legislation need to be absolutely clear that there is a target that the Government intend to achieve when it all goes live in due course.
	I hear whispers behind hands that, It will be 0.5, don't worry. In the saloon bars after the meetings that I go to, there is a lot of loose talk like that, which is quite worrying. The noble Baroness, Lady Noakes, is absolutely right to bring to the Committee's attention the importance of this figure. I hope that we will get an appropriate answer so that we can consider further amendments. Can the Minister say a little about the process that he has in hand to ensure that it is being considered seriously? Does the DWP talk to non-executive directors? What contacts or channels are available to the department to say to people who meet in saloon bars in the City, No, you are wrong; it is not 0.5, it is 0.3; it was 0.3, it is 0.3 and it will be 0.3?
	If this is allowed to drift and the Government get seduced into allowing this to float up, as the noble Baroness saidI commend her for the way in which she introduced the amendmentthe people who will be affected by this substantially are the members who take the schemes. This is an important amendment and I am pleased that it has been tabled. I support it and I hope that the Government will take it seriously.

Baroness Hollis of Heigham: I am not sure whether the amendment should be in the Bill, which is why it is important that my noble friend is able to clarify exactly, as far as he can, what the strictures and structures are of the personal accounts. That this should be the policy intent, objective and outcome that we seek to deliver, I think is absolutely right.
	When we were dealing with stakeholders, it was clear that even modest changes in charges, such as a rise in the stakeholders' initial charge from 1 per cent to 1.5 per cent, could wipe out returns on schemes that are, by definition, not aggressive; they are largely default75 per cent are likely to go into default schemesand therefore fairly low risk and modest in the investment returns that can be expected in most economic climates. Over and beyond management performance, what really matters is charge levels.
	In conference after conference, my noble friend Lord Turner made that point clear when he was pressed by the industry to raise the charges threshold. He said, No, you can get it down to this and, for reasons of investment return, you must. As I said, whether the provision should be in the Bill, I rather doubt, but I hope that my noble friend will today give us the reassurances that we need to address the substantial point made by the noble Baroness, Lady Noakes.

Lord McKenzie of Luton: I thank the noble Baroness, Lady Noakes, for moving the amendment and the noble Lord, Lord Kirkwood, and my noble friend Lady Hollis for their contributions.
	The provision in Clause 70(2)(d) reflects our commitment to low charges in the personal accounts scheme. It requires the delivery authority to take account of the effect on members' charges when making decisions relating to the design and implementation of the scheme. The amendment gives me an opportunity to explain more about our intentions and why it would be inappropriate to set a specific charge structure or level at this stage.
	As we made clear, low charges will be at the heart of the personal accounts scheme. Charges can have an important affect on people's pension incomemy noble friend Lady Hollis has just expanded on that pointand it is important that this should be reflected in the authority's work. I know from my meetings with Paul Myners and Tim Jones that they fully agree. However, it is too early to specify both the exact structure of the scheme and the level of the charges. Let me explain why.
	While our aim is to create a low-cost pension scheme, we have also made it clear that the personal accounts scheme should be self-financing in the long run. We expect its set-up and operational costs to be recouped from member charges. During the scheme's early years, before revenue flows from charges mature, costs will inevitably exceed revenues. The funding strategy for the scheme will therefore need to find a way of funding this shortfall until revenue from charges is sufficient to cover costs. PADA will advise on the funding strategy, but the exact funding solution will not and cannot be known until the design of the scheme is finalised and the commercial process is under way.
	In making its recommendations, the authority will need to consider how to strike the best balance between repaying this shortfall quickly, which could put an unreasonable charges burden on earlier members of the scheme, and taking too long to do so, which could mean passing the cost of additional interest and charges on to all members of the scheme. A limit on membership charges in the early years could restrict revenues of the scheme in the early years and in turn extend the time it will take for the scheme to become self-financing. This would add to the cost of financing, potentially to the detriment of scheme members.
	In addition, a limit on charge revenue could make private sector engagement in the scheme less attractive, as restricted revenue flows in the early years may mean that contractors have to provide more up-front financing and have to wait longer before they are paid back for their services. Aiming to set the charge level in this way might therefore compromise the authority's ability to drive best value from the market through its commercial and procurement strategies.
	Further to this, noble Lords will be aware that the delivery authority has been consulting on the best charging structure for the personal accounts scheme. Previous analysis has shown that there is no easy answer: no structure scores best for members' outcomes, encouraging participation and the sustainability of the scheme. Instead, trade-offs have to be made. It is not wise to pre-empt these careful deliberations by requiring the authority to have regard to an annual management charge. The authority's consultation document explains that there could be other more suitable charging structures for the personal accounts scheme. We should give the authority the opportunity to explore these as part of its wider work on funding the scheme. Therefore, while I agree with the spirit behind this amendment, it is important that we give the authority scope to decide how the set-up and early years' costs of the scheme should best be met.
	The noble Baroness asked about the membership figures in the financial model. We are exploring a range of options for the financing of personal account schemes, but it is too early to publish our current assumptions about costs and revenues due to inherent uncertainty and commercial sensitivity at this stage. The department has published a fact-sheet that, with the impact assessment, sets out our assumptions about potential participation, which are that between 4 million and 7 million people are expected to become members of the personal accounts scheme from day one. The authority's estimates of the costs involved in setting up the scheme are being continually updated to reflect new understanding of the detailed scheme's design, but actual costs will not be known until later in the procurement process.
	The noble Baroness also mentioned the figures of 21 million and 36.1 million. The 21 million figure that was included in the impact assessment that was published with the 2006 Pensions Bill was an early estimate of the funding requirement to support the delivery authority during its advisory stage, and was intended to cover the period from Royal Assent of that Bill, which is now the Pensions Act, up to July 2008. It was our best estimate at the time, but it was made early before the authority even existed and hence before it had a formal budget, a chairman or a chief executive, and at a time when our thinking on the work programme was still developing.
	Since PADA was established, spending in connection with the authority up to 31 March 2008 was around 12.5 million. Noble Lords will be aware that until 29 February 2008, the authority's costs were met using DWP resources, but since 1 March has been grant-in-aid funded and is now responsible for accounting for its own expenditure. This year's departmental estimates include an initial budget of 36.1 million for the 2008-09 financial year, and is intended to cover the authority's continuing advisory role and anticipates the funding that PADA may require once the delivery role is extended to allow it to set up the personal accounts scheme. As we have made clear, our intention is that the costs associated with PADA's role in setting up the personal accounts scheme will be recouped from members' charges, and the scheme is intended to be self-financing in the long run. The authority will therefore account separately for scheme-related expenditure.
	The noble Baroness referred to the number of consultants involved in this project. Given that PADA is going to have a finite lifeuntil 2013 on the basis of amendments in her name, although I note her indication that she does not intend to move themas she knows full well, it is often better to buy in a range of experience from consultants than to recruit people, particularly if their skills are needed for a relatively short time. There are of course some quite specialist skills involved in all this.
	I should say that how personal accounts are funded is an important decision, and the delivery authority is evaluating various options to identify the most appropriate method of financing. But noble Lords must accept that it will not and cannot be known until PADA has completed the scheme's detailed design and undertaken commercial negotiations to obtain the services that will underpin its delivery. That can begin only once the Bill reaches Royal Assent. At this stage, revealing information about the scheme's costs or possible funding arrangements could, I believe, prejudice PADA's ability to secure value for money during commercial negotiations. But I urge both the noble Baroness and the noble Lord, Lord Kirkwood, to take up the opportunity of a meeting with Tim Jones at PADA, who I am sure will be able to brief them as fully as he is able.
	The set-up of the compliance regime will be funded by the Government by way of a grant-in-aid funding stream, which will be kept completely separate from the regulator's current expenditure funded via the general levy and subject to parliamentary scrutiny. In terms of ongoing compliance costs, as I touched on in our debates last week, we are exploring further how these will be funded.
	Finally, on the question of whether a 0.3 per cent annual management charge is achievable, we expect that the charge level that will apply in the personal accounts scheme will be in line with Pensions Commission estimates in the long run. But I stress that the charge structure of personal accounts has yet to be decided. The delivery authority is responsible for advising on the charge structure for the scheme and will be consulting on the options. The final decision will be dependent on the end design of the scheme and the commercial procurement process. I am conscious that that will not satisfy the noble Baroness's demands for ever more information and I understand that because we would be asking the same questions in her position, but I hope she recognises that a lot of work has to be undertaken to get this scheme designed and to organise the funding arrangements. Until that is done, it would be foolhardy to commit to precise figures. For those reasons, I hope that the noble Baroness will withdraw the amendment.

Baroness Noakes: Let me get it straight at the outset that I did not ask the Minister to commit to precise figures, so I have not asked him to be foolhardy. I asked the Minister one simple and straightforward question: when the December 2006 White Paper was put together, the Government clearly had a view on costs and how they would translate into charges. Are the estimates that were produced at the time borne out by later experience or are they more or less than anticipated?

Lord McKenzie of Luton: Until the detailed work on the design of the scheme and all that goes with it has been completed, it is impossible to answer that question. We need to do that work to determine what the final costs will be. I do not understand why that is a difficulty for the noble Baroness. It is absolutely plain that, until we have done the work and know the detail involved, how it is going to be put together and what the final and full design is, we cannot give final costings. That is not an unreasonable position.

Baroness Noakes: I have not asked for final costings. I have asked for up-to-date estimates.

Lord McKenzie of Luton: The up-to-date estimates can be given when we have done further work on the design of the scheme. If it is work in progress, we do not update estimates every single day as progress is made on the design of the scheme. No one would do that.

Lord Kirkwood of Kirkhope: This is all the other way round. I listened to Mr Jones make a compelling case, in which he used the phrase that he is going to design an Expedia, not a Thomas Cook. It will be internet-based and low cost; it will be all in the sky; there will be no mail and no face-to-face. He is doing that only because he knows that he has a certain amount of money and has to stay within the constraints of 0.3 per cent AMC.
	I am pleased that the noble Baroness tabled the amendment because I am getting more sceptical as the debate goes on. If Mr Jones feels that he has more than 0.3 per centif he can nudge it up to 0.5 per centhe will design a different scheme. So, unless he knows the envelope within which he is working, how can he possibly be expected to design a scheme? It is all the other way round.

Lord McKenzie of Luton: I do not agree with the noble Lord. The proposition is to design a low-cost scheme targeted on low to medium earners within the parameters that we are debating in the Bill. That is the wraparound of what has to be achieved and the broad remit of Tim Jones and his team in getting the funding strategy in place and the charging that will result from it. Again, this is within the constraint that it has to be self-financing in the long term. Those are the parameters within which he has to act and undertake his work and we should let him get on with it, rather than every single day trying to get an update on where he is on his costings. That seems an entirely reasonable position.

Baroness Noakes: It has been an interesting debate and I thank the noble Lord, Lord Kirkwood, and the noble Baroness, Lady Hollis, for their support. I emphasised that I was not seeking to put 0.3 per cent in the Bill; the important issue was to flush out the position on costs.
	The Government are asking us to buy a pig in a poke. We are invited to give the powers and authorities that come with the Bill, but they have not worked out what it will cost. They are going to carry on working on it until some point in the future; there are no parameters within which we can expect outcomes to be achieved; and we are given no information about the emerging costs. Estimates were carried out in December 2006 but the Minister can give me no further information now. He said that it is a matter of commercial confidentiality and that he cannot give me final estimates, for which I have never asked. This is entirely unsatisfactory.
	PADA is already spending large amounts of money. By the end of this financial year it will have gone through the best part of 50 million. However, we do not know what the money is being spent on, what we are getting for it and what the total cost is heading towards. When the Identity Cards Bill came through Parliament, to give a similar example, we were at least told that over the first 10 years 5.7 billion would be spent. We did not make much progress on what lay behind that figure, which is why Parliament, in its wisdom, required the Home Office to present cost reports on a six-monthly basis. That 5.7 billion over 10 years is ever such a lot more information than we are getting on this Bill. The Home Office had cost estimates that were examined by accountants and reported on with some bits taken out to ensure commercial confidentiality. We knew ever such a lot more in that case. In this case we know absolutely nothing.
	The Minister hides behind a series of abstract words about what is being delivered. Mr Myners and Mr Jones also do that in meetings. There is very little point in having a meeting with them if one has already seen the evidence given to Select Committees and heard the reports from other meetings, because no further information is forthcoming. We are told about internet-enabled things, but no specifics on the cost emerge. It is not reasonable to ask Parliament to proceed with such a Bill unless we have information on the cost and the subsequent effect on charges.
	I hope the Minister will reflect on this before Report. It is an important part of the whole picture in deciding whether the design we are being asked to support can fly and whether it is within the scheme that we all agreed was a good one to go forward. We are not being given enough information to know whether we should still support what we signed up to. I hope the Minister will go back to his department and look again at what information can be made available, not at what information cannot be made available. To date, the Minister and PADA seem to have been involved in a process of asking, How many ways can we say that we will not give you the information?. We need to move beyond that.

Lord McKenzie of Luton: Perhaps I may clarify one point. The noble Baroness suggested that about 50 million will be spent by the end of this year but we do not know what it will be spent on. PADA will produce an annual report and be required to lay its accounts before Parliament, so what is spent will be clear as we go along. I know that that is not the same as forward estimates for the scheme as a whole, but it is not right to say that what is spent will not be accounted for, if that was the implication.

Baroness Noakes: I never suggested that PADA would not account properly for the money that it has spent or that the DWP would not account properly for the first 13 million or so that was spent on its own budget. But information received some time next year, after the event, tells us nothing about the total cost of the scheme. I was merely using that to show how little we know about the emerging cost profile of this scheme.
	We will not get any further today. I just want the Minister to know that his response has been profoundly unsatisfactory. We have to make more progress on this at Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 113H and 113HA not moved.]
	Clause 70 agreed to.
	Clause 71 [Directions and Guidance]:

Baroness Noakes: moved Amendment No. 113J:
	Clause 71, page 35, line 5, after directions insert and guidance

Baroness Noakes: I shall speak also to Amendments Nos. 113K, 113L and 113M. Clause 71 deals with directions and guidance, both of which may be given to PADA by the Secretary of State. My amendments pursue a theme of transparency.
	Amendment No. 113J amends Clause 71(4) so that guidance as well as directions must be in writing. Under Clause 71(2) PADA must have regard to guidance, so it seems impossibly informal and open to misunderstanding if that guidance is not reduced to writing. If there is no requirement for a formal record of guidance, the Bill will tolerate guidance given by a series of nods and winks or other communications that would lack clarity. There can be no excuse for not properly recording guidance.
	Clause 71(5) requires directions to be published, and Amendment No. 113K requires guidance also to be published. Amendment No. 113L requires publication of either guidance or directions to be within one month of the direction or guidance being issued. At present there is no limit at all on publication, hence the issue of directions under the clauseor guidance, if my earlier amendment is acceptedcould be in six months or a year, or put in the annual report perhaps 15 months later. Amendment No. 113N would require the directions and guidance to be included in PADA's annual report.
	These are not intended to be nitpicking amendments. What PADA does will have an impact on the world outside Whitehall, and it is vital that the basis on which it operates is, first, completely clear to PADA itself, so guidance should be clear and recorded in writing, and, in turn, clear and transparent to the outside world.
	I expect that the Minister will say that directions and, particularly, guidance will cover a lot of detailed matters of no interest to the outside world. The Government should let that world say what interests it, rather than having the Government decide that for it. I hope he will not hide behind some notion that giving guidance to PADA is not the kind of thing that should be exposed because it will raise issues of confidentiality; that is the kind of thing that gives the process of government a bad name. I say: let sunlight into the relationship between the Government and PADA. I beg to move.

Lord McKenzie of Luton: The authority has been established as an independent expert body to advise on, and take forward, implementation of the personal accounts scheme. However, it is a non-departmental public body, so accountability to Parliament for the authority's performance in action rests ultimately with the Secretary of State. Clause 71 sets out provisions allowing the Secretary of State to issue directions and guidance. Such provisions are a common feature of relationships between an executive NDPB and its sponsoring department. These measures provide reassurance to the Government and, importantly, to Parliament that appropriate procedures are in place to ensure that the NDPB works within its scope, does its job properly and manages itself to the standards we expect from a public body.
	I shall take this opportunity to outline the clear distinction between guidance and directions. Directions must be complied with. As a rule, they are issued only in exceptional circumstances and are of such significance that it is only right that they should be published, so the Bill will require that. An example of a possible direction would be if the authority clearly disregarded one of the principles in Clause 70. In such an unlikely event, the Secretary of State might issue a direction requiring the authority to take corrective action. The principles are designed to ensure that PADA gives due weight to the public policy underpinning personal accounts, and the power to give directions will ensure that they work as we intend.
	Directions should be published promptly. Indeed, during debate in the other place, my honourable friend the Member for Warwick and Leamington said that,
	we intend that the directions would be published as soon as they were made, subject to the necessary practical arrangements.[Official Report, Commons, Pensions Bill Committee, 5/2/08; col. 419.]
	I will arrange for those to be available in the House Library.
	Guidance, as the noble Baroness acknowledged, can be much more routine and a standard part of how departments work with their NDPBs. The provision allows the sponsoring department to clarify its expectations of the work being carried out by the NDPB and give policy steers about the work being led by the NDPB. As a rule, the NDPB must have regard to such guidance but does not have to comply with it, as is the case here. Existing legislation for different NDPBs sets a variety of requirements as to whether directions and guidance should be written and published. That is dependent on the nature of the NDPB and the role it is undertaking.
	The noble Baroness's amendments seek to ensure that, as with directions, all guidance issued to the authority must be in writing and must be published. I sympathise with the intent of these amendments; transparency in the work of NDPBs and their dealings with Government is of great importance. However, requiring all guidance to be put in writing, or indeed published, is not the most effective way of workingin fact, we think it could get in the way. Guidance will not be an exceptional occurrence; rather, it will be part of the continuing dialogue with my department as the authority carries out its functions in delivering the personal accounts scheme, which is, of course, part of a broad pension reform programme.
	Guidance covers the full range of activity carried out by both organisations, from the mundane administrative tasks to serious matters of policy formation. As an example of the first, the authority has recently relocated its London office and, while the decision on the suitable location was made by the authority, the department, in its role of steward, provided a great deal of guidance on how such public sector processes are managed. It would obviously be entirely disproportionate to require that sort of guidance to be written down and published.
	At the other end of the scale, the department and PADA are working together on the secondary legislation to establish the scheme. While many of its aspects are now in the public domain, such as the contribution limit, the further work on scheme development will throw up detailed questions that will need to be resolved by discussion between the authority and the department and, quite possibly, through guidance of one sort or anothersome written, some not. It would plainly not be appropriate for all these discussions to be made public. Information will remain available under the Freedom of Information Act in the usual way, but it is important that commercial confidentiality and the need for candid discussions in relation to the development of proposals in this important area of public policy should be respected here, as in all other relevant cases.
	Of course, once proposals have been agreed, they will be set out in a draft order and rules and will be issued for wide consultation. Given the commitment to consultation that has been demonstrated across this programme, I hope that Members of the Committee will accept the need for periods of policy formation to take place, protected from public exposure. This is particularly important for a time-limited body such as the authority, involved closely with other organisations in a broad programme of reform, working to a demanding timetable.
	Much of this guidance will, as a matter of good working practice, be made in writing. However, introducing a requirement for all guidance to be put in writing and, further, to be published would impose unnecessary and inappropriate demands on the programme. Of course, the authority and the department will fully adhere to Cabinet Office guidance and to the Freedom of Information Act. I believe that this treatment of directions and guidance strikes the right balance between transparency, effective collaborative workinggiven the authority's role in the wider programmeand the need to respect confidentiality in an appropriate manner in a highly commercial context. I hope that that has addressed the noble Baroness's concerns.

Baroness Noakes: I am rather unconvinced by the point that guidance should not be put in writing. Perhaps the Minister can help me. The authority has to have regard to guidance. The authority will be the boardthe directors who are appointed to PADA. How are they to know what guidance they have been given?

Lord McKenzie of Luton: It depends on the circumstances in which that guidance is offered. During my time on the child maintenance programme, there was a raft of meetings with officials from the redesign team, who would discuss various options, and various steers were given. Those options were then worked up, documented and put into the system. It also depends on the level of issue that is being dealt with. Often the guidance is not put in writing at the point of delivery; invariably it is in documentation and specific proposals, and sometimes in specific regulations, as I have just outlined. That is the normal process of government.
	I hope that the noble Baroness will respect the fact that issues surrounding policy formation are confidential within government and are protected under the Freedom of Information Act. What is important, once guidance has been issuedwhether it is ignored or taken on boardis that the resulting policy is properly documented and implemented and that Parliament has the opportunity to see the results.

Baroness Noakes: I shall not take up much of the Committee's time, but perhaps I may say that the Minister's response was really a bit silly. Trouble has been taken to write guidance into the legislationnot all NDPB legislation has guidance written into statutebut this is going to proceed on the basis of meetings that officials will attend. It will not even be a matter of the Secretary of State giving the guidance. Officials and possibly junior Ministers sitting together will somehow constitute guidance. The drafting is about as silly as the Minister's response. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 113K and 113L not moved.]
	Clause 71 agreed to.
	[Amendments Nos. 113M and 113N not moved.]
	Clause 72 [Finance]:
	[Amendments Nos. 113P and 113Q not moved.]
	Clause 72 agreed to.
	Clause 73 agreed to.
	Clause 74 [Non-executive committee]:
	On Question, Whether Clause 74 shall stand part of the Bill?

Baroness Noakes: I have given notice that I wish to debate the question whether Clause 74 stand part of the Bill because I would like the Minister to explain why, for a limited-life organisation, which as noble Lord reminded us a moment ago PADA is, such an elaborate mechanism as a non-executive committee is being created. The non-executive committee is a new Labour invention. It can be traced to Mr Ed Balls's ideas of governance, which saw the light of day in the Bank of England Act 1998. It has since been repeated in some legislation, including the Pensions Act 2004, but it is far from universal practice. For example, the Statistics Board, which was created by statute last year, is not encumbered with one.
	I shall not today argue against the concept of the non-executive committee. It is true that the Bank of England experiment has worked only because successive courts of the Bank of England have devised workarounds that bypass the strict letter of that Act. The Government's latest consultation paper on financial stability promises modernisation of the court. It will be interesting to see whether the modernisation of 1998 has stood the test of time. If it has not, and if the draft banking Bill that we are promised by the Summer Recess contains changes, I may want to revisit that issue.
	For today, I am asking the Minister to say why the Government are bothering to set up the elaborate non-executive directors committee. PADA will last until 2012 or a bit beyondwe will come to that later. Other bodies manage without the committee, so why cannot PADA? The board comprises largely non-executives in any event. Even if PADA goes up to its maximum of nine members and all remaining spaces are filled by executive directors, there will still be a majority of non-executives on it. PADA already has the power to set up committees under the 2007 Act. If a non-executive committee is a good idea, PADA can perfectly well set one up without taking up the legislative space that the clause involves. I look forward to hearing the Government's rationale for Clause 74.

Lord Tunnicliffe: The Bill will allow the authority's remit to be extended to enable it to undertake the detailed implementation work necessary to establish the personal accounts scheme, in particular to take forward work on the specification, design, procurement and build of the personal accounts infrastructure. In carrying out this work, the authority will have operational independence and autonomy. It may enter agreements and, with the Secretary of State's consent, be permitted to borrow money to cover the costs that it will incur in carrying out its functions. In light of this, the measures in this clause are designed to promote good governance, reflecting practice in corporate governance and providing reassurance to Parliament that the authority is managing its affairs appropriately.
	Clause 74 supplements Part 2Proceedings etc.of Schedule 6 to the Pensions Act 2007 and requires the authority to establish a non-executive committee. It also allows the committee to regulate its own procedures and sets out its functions. The committee will consist solely of the non-executive members of the authority, including the chairman. It will be responsible for reviewing the internal financial controls and for appointing and deciding on the remuneration of executive members.
	If the committee wishes, it may establish sub-committeesfor example, to provide advice or assistance on matters relating to its functions. Any such sub-committee could include persons who are not employees of the authority. This will enable the non-executives to secure any additional expertise or specialist skills that they might require. To provide transparency, the committee will be required to prepare a report on the discharge of its functions. That will be included in the authority's annual report.

Baroness Noakes: The Minister read out his speaking note very prettily, but he did not answer a single question that I raised. However, I am not going to pursue the matter today.

Clause 74 agreed to.

Lord Tunnicliffe: moved Amendment No. 113QA:
	After Clause 74, insert the following new Clause
	Executive members
	(1) Schedule 6 to the Pensions Act 2007 (c. 22) is amended as follows.
	(2) For the italic cross-heading immediately before paragraph 6, substitute Executive members and employees.
	(3) For paragraph 6(6) (chief executive and other executive members to be employees) substitute
	(6) The chief executive is to be an employee of the Authority.
	(6A) The Authority may appoint any other executive members as employees.
	(4) In paragraph 7 (terms and conditions of executive members)
	(a) in sub-paragraphs (1) and (2), before employed by the Authority insert , if appointed as employees under paragraph 6(6A), are to be;(b) in sub-paragraph (3)(a), omit employees who are.

Lord Tunnicliffe: I shall speak also to government Amendment No. 139C. These amendments seek to give the authority greater flexibility in the appointment of its executive members. The authority will be establishing an occupational pension scheme, which could be one of the largest pension savings schemes in the world. This is a task of considerable complexity. The authority needs to be in a position to recruit the best peoplestrong leaders with expertise and specialist skills in a variety of areas. Recruitment is a matter for the authority and we are seeking this adjustment at the request of the chief executive, who has indicated that it would be beneficial for the authority to have greater flexibility to attract and engage the right candidates for executive posts.
	We have previously made it clear, in the Government's response to the consultation on the personal accounts White Paper, that,
	it will be for the chair and the chief executive to make sure that they engage the right people at the right time.
	In reviewing its plans, the authority has also had an opportunity to focus on future resource requirements, including the specialist skills and experience needed to deliver the scheme over a very short timescale. Amendments Nos. 113QA and 139C, which makes a small consequential change to Schedule 9, will remove the requirements for executive members to be employees of the authority. This is to enable the authority to broaden the field of potential candidates to include high-calibre individuals who could be deterred by the requirement to give up a long-term employment for a relatively short-term appointment. This could encourage, for example, individuals to apply for appointment on loan or secondment from other organisations.
	In closing, let me be clear. The amendments do not alter the requirement that any recruitment process must be open and fair. In managing its affairs, the authority will continue to observe best practice guidance set out in Making and Managing Public Appointments and the Office of the Commissioner for Public Appointments code of practice. I beg to move.

Lord Skelmersdale: I must have misheard the Minister, because I thought that he said that Amendment No. 113QA referred to Schedule 9. Of course, it does notit refers to Schedule 6. The substantive difference in paragraph 6(6) of Schedule 6 to the Pensions Act 2007 that these two government amendments give us is that now PADA may appoint other executive members as employees. First, is that not putting the cart before the horse? Surely it is employees who might be appointed as executive directors under PADA, not vice versa. In any case, is it not the case that under the Companies Act all executive directors are automatically employees? I do not know the answer to thisperhaps PADA does not fall under that Act. If it does, is this amendment really necessary?
	As for Amendment No. 139C, removing the words employees who are from paragraph 7(3)(a) seems a little odd, since all employees, including executive members under Amendment No. 113QA, are to be paid pensions allowances or gratuities under paragraph 8(2)(a) of Schedule 6 to the 2007 Act, which these two amendments do nothing to alter. All that seems required is the removal of the word other in that paragraph heading, so that it reads Terms and conditions of employees. Paragraph 8(3) would then surely become otiose.
	I have three little questions on the amendment. Paragraph 1(4) of Schedule 6 to the 2007 Act says:
	Both the Secretary of State and the Authority must aim to ensure that the Authority has neither less than 3
	which I understand it has at the moment
	nor more than 9 members at any time.
	How many executive members are intended to be appointed? I hope that the noble Lord, Lord Tunnicliffe, will be able to answer that. Secondly, what skills are still to be required? ThirdlyI assume that the answer is yeswill a finance director be included among the maximum number of nine?

Lord Kirkwood of Kirkhope: I add a question or two to the reasonable questions asked by the noble Lord, Lord Skelmersdale. In moving the amendment, the Minister suggested that it was Mr Jones's idea and, in passing, added a sentence or two as to why that was. I did not catch the burden of that. It would affect my view of the amendment if there was a substantial request from those running the authority. I have a deal of confidence in Mr Jones from what I have seen of him; I have not seen him much, but I think that he knows what he is doing. I would give weight to the reasons that he adduced for the Government requiring this change. Otherwise, I do not think that the case that has been made so far is compelling. The noble Lord, Lord Skelmersdale, has some good questions, which require answers.

Lord Tunnicliffe: I am unable to answer any of the questions asked by the noble Lord, Lord Skelmersdale, at this time, and will write to him with the details; at least I am following his advice. He is right that it should be Schedule 6. PADA is not a company and is not subject to company rules. Paragraph 6(6) of Schedule 6 to the 2007 Act says plainly that executives must be employees. The essence of these amendments is to allow people to be seconded under a service contract to PADA, as members, without having to discontinue employment. They may, for instance, be civil servants; they may be accountants, actuaries or other professionals. It seems that we have decided in the gap that there will be four executive members of the team.

Lord Skelmersdale: I did not ask how many executive members there were; I asked how many members there would be, referring to a maximum of nine under paragraph 1(4) of Schedule 6 to the 2007 Act. However, since we now know that we have four executives, assuming that the seconded people will be non-executive directors, what are they all going to do? I still have not had an answer as to whether there will be a finance director, but I assume that there will be.

Lord Tunnicliffe: My apologies; I thought that the noble Lord had asked how many executive directors there would be. He may not assume that the seconded directors will necessarily be non-executive directors. They may indeed be executives. They will not be employed but will provide their services as part of a service agreement with the company that employs them.

On Question, amendment agreed to.
	Clause 75 [Winding up of the Authority]:

Baroness Noakes: moved Amendment No. 113R:
	Clause 75, page 37, line 7, at end insert at any time, and must do so no later than the end of 2013

Baroness Noakes: This amendment would amend Clause 7, which in turn amends Section 23 of the Pensions Act 2007. We are keen to ensure that the public sector landscape does not get littered with time-expired quangos. During the passage of the 2007 Pensions Act we argued that a time limit should be put on PADA's existence. Clause 75 updates the 2007 Act but still has no time limit. Accordingly, my Amendment No. 113R says that the Secretary of State can exercise his power to wind up PADA at any time, but must do so no later than the end of 2013.
	Since PADA's functions should run out broadly when the new personal accounts pension scheme and auto-enrolment are up and running, it should cease to exist at that point. We could have put 2012 as our drop dead date, but we are already aware that 2012 is looking aspirational at best. We debated that earlier. Therefore, we have put a one-year extension in our amendment. If the Minister has any reason for extending the life of PADA beyond 2013other than his favourite all purpose reason of flexibilitywe should be very pleased to hear it.
	If PADA has not completed its functions by 2013, it will clearly have failed and ought not to be in existence. This deadline in legislation will remind PADA that it needs to get its job done and will also act as a spur to the Secretary of State to ensure that it does so.
	Amendment No. 139B is grouped with Amendment No.113R. I shall leave it to the Minister to speak to that amendment, but I hope that he can say why it appears to be positioned in a part of Schedule 9 which deals with safeguarded rights. I beg to move.

Lord McKenzie of Luton: Clause 75, alongside Section 23 of the Pensions Act 2007, provides for the winding up of the authority once it has completed the task of setting up the personal accounts scheme.
	Amendment No. 113R would require the Secretary of State to provide for the wind-up of the authority by the end of 2013. As I have already said, and Tim Jones, the chief executive of the authority, has confirmed, we believe that a 2012 launch for personal accounts is achievable. However, we are still four years away from that commencement date and, as the authority has indicated in its report on its plans for delivery, at this early stage there is inevitably a degree of risk and uncertainty associated with a project of this scale, innovation and complexity.
	Furthermore, it is also necessary to consider the arrangements for the handover of the personal accounts scheme to the trustee corporation, which will be responsible for the day-to-day operation of the scheme. The authority will develop a plan setting out the legal, commercial and technical steps that will need to be taken for handover to be achieved successfully. As part of that process, there will be a period during which the authority will need to work alongside the trustee corporation to facilitate the transfer of the infrastructure and processes the authority has developed. It is too early to say at this stage exactly how this handover will work. As the report from Tim Jones's re-plan showed, the focus of the authority at the moment is on the design of the scheme. Of course, the views of the trustee corporation on handover will be extremely important. It would not be wise to pre-empt any decisions on this.
	I reiterate that the authority is a time-limited body and there is no intention that it should continue to exist after the trustee corporation has fully taken over the running of the scheme. However, I hope the noble Baroness can appreciate that we do not want to take the risk that the authority could be wound up before this has taken place.
	Government Amendment No. 139B is a technical amendment to correct drafting. It simply adds a reference to the subsections that Clause 75 removes from the Pensions Act 2007 in the table of repeals in Schedule 9. Therefore, I am not sure what the noble Baroness was concerned about. If she wants to expand on that, I shall see whether I can help further.

Baroness Noakes: The government amendment is positioned under Part 2 of Schedule 9 headed Safeguarded Rights, which seems to have nothing to do with what I understood the amendment was about and certainly nothing to do with the amendment with which it was grouped.

Lord McKenzie of Luton: Quite why the amendments are grouped together is an interesting question. I am not sure how that happened. I believe that the place of the amendment is in Schedule 9. It is a repeal of the subsections that Clause 75 removes from the Pensions Act 2007. I am unclear on the reason for the grouping, although I think I am about to be enlightenedno, it is indecipherable.

Baroness Noakes: I wager that the note says that there is an error in the heading of Schedule 9; we shall see. The Minister keeps telling us that PADA is time-limited, but I have never heard of something that is time-limited without a time limit. The body has been created by statute in perpetuity. We invited the Minister to agree with our amendment on 2013. What about 2015? Perhaps the Minister would consider that.

Lord McKenzie of Luton: It just seems to me not to be a particularly fruitful exercise to bandy around specific dates. We have indicated that we currently plan and expect the scheme to start in 2012. Given the role that the authority has played in the development of the infrastructure and everything that goes with it, anyone should recognise that for it to continue even after the project has been turned over for running by the trusteea bit of parallel involvementmust be prudent and sensible. Who knows what issues might arise in terms of the background thinking or policy development that went into the creation of the scheme and infrastructure as it will end up. To try to put some arbitrary date on that is not a particularly fruitful use of our time.
	We have made it clear that the authority will be time-limited, and we have made it clear that we want personal accounts to start in 2012. We recognise that there will be some overlap, as the authority will need to be on hand to support the trustee corporation in running the scheme. That seems to me to be clear enough and acceptable to noble Lords.

Baroness Noakes: I am sorry, but the Government keep saying on the one hand that it is time-limited and then refusing to give a time limit. Either the Minister can stop the little white lies about whether it is time-limited, or he can accept my amendment, or a variant of my amendment, which I have generously now extended for an extra two years. I could negotiate for even longer. If we have a time-limited organisationwe are in agreement that we do not want PADA to exist beyond its proper functionswith no time limit, the danger is that it will carry on existing, because it will acquire functions that are within the rather generous description of its functions at the beginning. I will not pursue this now, but we might come back to it on Report. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 75 agreed to.
	Clause 76 [Stakeholder pension schemes]:
	[Amendment No. 113S had been withdrawn from the Marshalled List.]

Lord Tunnicliffe: moved Amendment No. 113T:
	Clause 76, page 38, line 24, leave out paragraphs (a) and (b) and insert , omit subsections (1), (2) and (4).

Lord Tunnicliffe: Clause 76 removes the duty placed on employers under Section 3 of the Welfare Reform and Pensions Act 1999 to designate a stakeholder pension scheme for their employees. It is not appropriate for employers to comply with both the new obligations under the Bill and the current requirement to designate a stakeholder pension scheme. So we are removing the designation requirements, except for a transitional provision, which will allow those employees who are paying into their stakeholder pension through the payroll to continue to do so. That is all in Clause 76.
	We also want to take the opportunity to remove some unnecessary provisions that remain in Section 6 of the Welfare Reform and Pensions Act 1999. Amendments Nos. 113T and 139ZE will do exactly that. The Pensions Act 2004 amended the definition of an occupational pension scheme in the Pension Schemes Act 1993 and consequently gave employees of trust-based stakeholder schemes the same rights and protection afforded to their counterparts in occupational schemes. We are, therefore, taking this opportunity to remove Sections 6(1) and 6(2), which make specific provisions to protect employees of trust-based stakeholder schemes, as these subsections are now redundant. I beg to move.

Lord Skelmersdale: As the Minister has said, we return to the Welfare Reform and Pensions Act 1999. That was quite a long time ago. I wondered what the designated scheme under Section 6(2) of that Act, which is now to be ignored, was there for. Under this Bill it was to be a stakeholder scheme, which has now been removed by virtue of this government amendment, because the noble Lord, Lord Tunnicliffe, said it was not appropriate. He may have said why it was not appropriate, but if he did, I missed it. It would be extremely helpful if he would repeat it.

Lord Tunnicliffe: In essence, we considered it inappropriate to have two duties on the same employer. When this scheme comes about, the employer will have a duty to auto-enrol people into an appropriate scheme. There will no longer be a necessity for the duty under the original Act. Therefore, Clause 76 removes that duty, so that employers do not have two duties. The only requirement that is retained is that people who are already enrolled in such schemes will retain their right for contributions to be paid through their payroll.

On Question, amendment agreed to.
	Clause 76, as amended, agreed to.
	Clause 77 [Employee, worker and related expressions]:

Lord McKenzie of Luton: moved Amendments Nos. 114 to 118:
	Clause 77, page 38, line 34, leave out subsection (2)
	Clause 77, page 39, line 11, leave out an employee or and insert a
	Clause 77, page 39, line 12, leave out employee or
	Clause 77, page 39, line 12, at end insert (subject to sections 33(6) and 34(6))
	Clause 77, page 39, line 14, leave out paragraph (a)
	Clause 77, page 39, line 17, at end insert , and related expressions are to be read accordingly
	On Question, amendments agreed to.
	Clause 77, as amended, agreed to.
	Clause 78 [Agency workers]:

Lord Skelmersdale: moved Amendment No. 118ZA:
	Clause 78, page 39, line 32, leave out relevant person under subsection (3) and insert agent

Lord Skelmersdale: I may be exemplifying some of my confusions as to what the Minister said earlier. It seems to be months ago, but it is probably only weeks, that I asked him who was to be responsible for agency workers with regard to auto-enrolment. His answer referred me to Clause 78that it was the responsibility of the person who actually pays the workers. The noble Lord gave me the impression that he expected that person to be the agent, rather than the person for whom the work was done. My amendments would transfer that responsibility in all cases to the agent handling the worker.
	This would have many advantages. First, a defining characteristic of agency workers is that they tend to change jobs frequently and with very little notice. One can imagine an agency worker who wished to opt out of pension provision having to sign a form at each and every new employmentperhaps one should say sub-employment in this caseand because of the delay in returning his contribution, he might experience considerable fluctuations and uncertainty regarding his take-home income.
	Let me take an example of an agency finding a gang of workers who are to spend three weeks picking apples in a cider orchard. As I understand the matter, although the agency provides the workers, it is the farmer who pays them, so, under the Bill, the Minister says that it will be the responsibility of the farmer to pay 7 per cent to the trustees; in other words, his 4 per cent plus the workers' 3 per cent. We still do not know the mechanics of this but, for now at least, I shall pass over that fairly vital matter.
	The point is that the apple pickers may well have finished their work in the orchard by the time that the monthly payment is due to the trustees. Will there not be a huge temptation for the farmer to hang on to the money and not register the workers? As the latter are probably used by the same agency for agricultural or horticultural work throughout the year, I believe that the agency should always be responsible. That way, the worker would not miss out on pension saving, which is, after all, the Bill's very proper objective. It would surely be easier for the paperwork on existing pension pots for salary levels and opt-in or opt-out preferences to be handled by the agency. The cost of the pension contributions could be passed on to the hiring companyin this case, the farmerwith ease by being factored into the agent's commission.
	I tabled Amendments Nos. 118ZA to 118ZC to make the agency responsible in every case. Although the noble Lord will not like my draftinghe never does, which is a little odd because it is only rarely that I disagree with hisI hope that, for once, he sees the sense of what I am suggesting. I beg to move.

Lord McKenzie of Luton: I have a substantial team to help with my drafting.
	In responding to Amendment No. 118ZA, I will speak also to Amendments Nos. 118ZB and 118ZC. These reforms aim to extend the benefit of workplace pension saving to all those who wish to save. Accordingly, this Bill ensures that the reforms cover individuals who obtain work through agencies as a stopgap between permanent employments, a stepping-stone into permanent employment or simply because it suits their lifestyle.
	As is the case with most groups of workers, some agency workers will be on moderate to low earnings and are therefore among the target group for this reform. Most workers who find work through agency arrangements are routinely captured by the definition worker in Clause 77. In the example that the noble Lord gave of apple pickers, it may well be that the individuals had a contract with the agency or the farmer. Clause 78 provides a safety net for those who do not. Where there is no contract between the agency or client hirer and the agency worker, Clause 78 establishes a link that is equal to a contract for the purposes of Part 1. This is achieved by deeming the business that is responsible for paying the wages of the individual or, if this is unclear, the business that actually pays the individual, to be the employer for the purposes of workplace pension saving. It brings into scope any agency worker who, as a consequence of the nature of their employment relationship, would fall outside the definition of worker. It ensures that all temporary workers are on an equal footing for the purposes of workplace pension saving. It also avoids the creation of an unhelpful division in the market for labour or the introduction of a perverse incentive that could influence the way in which businesses recruit labour.
	The noble Lord's amendment seeks to remove any obligation on the employer arising as a result of this Bill in relation to agency workers. I make it clear that in the overwhelming majority of cases, the obligation will arise as a result of a contract. In the common practice whereby an agency supplies a worker's services to an employer, the contract will routinely be with the agency.
	However, in the unlikely scenario that an agency worker is employed without a contract, the fallback position is that the obligation falls to the party that pays the agency worker. This follows the approach used in the National Minimum Wage Act and the Working Time Regulations and provides the necessary protection to ensure full coverage of these reforms for relevant agency workers.
	The noble Lord asked about pension contributions. When they are deducted from a worker's pay, they must be handed over to the pension scheme within 19 days of the month following the month in which the deduction was made.
	I hope that that has clarified matters for the noble Lord and that he feels able to withdraw these amendments.

Lord Skelmersdale: I am sorry; I got slightly sidetracked. I listened with a certain amount of incredulity to what the Minister saidso much so that I think I shall have to read it extremely carefully in Hansard tomorrow. However, the situation that he and I should both be trying to avoid is that of the agency worker falling between two stools. That is what worries me. I hope that we can give this matter serious consideration over the Summer Recess before we reach the next stage of the Bill.

Lord McKenzie of Luton: That is precisely what this clause is about: it is intended to stop an agency worker falling between two stools. As I said, routinely we would expect an agency worker to be a worker because there would typically be a contract with the agency, and therefore no extra provisions would be needed as he would be like any other worker. Clause 78 deals with situations where there may not be a contract between the individual worker and either the agency or the client. This is essentially a deeming arrangement so that the provisions of the Bill can operate, and we identify which of those two would be treated as the employer. That is the sort of protection that I think the noble Lord is seeking. Routinely we would expect agency workers to have a contract with the agency and therefore the normal rules of the Bill would apply to the agency in respect of auto-enrolment.

Lord Skelmersdale: Yes, but when I studied this, which I did quite carefully some weeks ago, I came to the conclusion that, although it works in a legal sense, it does not have the desired effect. However, I shall certainly not pursue this matter now. As I suggested, perhaps the noble Lord and I should reconsider this over the Summer Recess and, if necessary, I will come back to it. At the moment, I confess that I am not totally convinced by what the Minister said, but I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 118ZB and 118ZC not moved.]
	Clause 78 agreed to.
	Clause 79 agreed to.
	Clause 80 [Armed forces]:
	[Amendment No. 118ZD not moved.]
	Clause 80 agreed to.
	Clauses 81 to 83 agreed to.
	Clause 84 [Share fishermen]:
	On Question, Whether Clause 84 shall stand part of the Bill?

Lord McKenzie of Luton: In opposing the Question whether Clause 84 shall stand part of the Bill, I shall speak also to Amendment No. 118ZE and the other amendments in this group.
	As currently drafted, Clause 1 automatically includes seafarers of any nationality working on any ship who work or ordinarily work in Great Britain. That includes non-UK nationals on a non-UK ship passing through waters adjacent to Great Britain. This would potentially breach international law and custom. In addition, the clause excludes other key groupsfor example, seafarers who are UK nationals working on UK ships outside UK waters.
	Although our broad intention is to extend these reforms to seafarers and offshore workers in appropriate cases, we do not want inadvertently to rule in or out any particular group prior to a detailed consultation. Accordingly, to achieve a solid base on which to take forward this work, we propose that Clause 84 in respect of share fishermen does not stand part of the Bill and seafarers are not initially treated as workers for the purpose of these reforms. I should assure noble Lords that the existing Clause 84 is no longer necessary. Share fishermen are persons working on vessels and therefore will be addressed by the new Clause 118ZE. We have removed the existing Clause 84 so that there is no duplication.
	Our intention is to work with key stakeholdersfor example, the UK shipping and offshore work industriesand the unions carefully to consider these and other groups separately and then to make recommendations available for public consultation. I hope noble Lords will agree that it is important that we consult widely about any potential adverse impacts for individuals and indeed the industries involved that may arise by the extension of these reforms.
	These amendments will enable the inclusion of groups of seafarers and offshore workers, but only those to whom the Bill is applied by regulations and as defined by Order in Council. In line with the recommendations made by the Delegated Powers and Regulatory Reform Committee in its 11th report of this Session, both these powers will be subject to affirmative resolution. To achieve this, the original government Amendment No. 118ZF in respect of offshore workers, which was tabled on 23 June, was withdrawn and replaced with Amendment No. 118ZG.
	Experience has shown that these areas are complex and raise difficult issues of international and European law, so it is appropriate to allow more detailed consideration on which of the seafarers and offshore workers should be included. If we leave the Bill as it stands, there is a danger that we could infringe on international law and custom and adversely impact the UK shipping industry.
	Although these reforms will not come into effect until 2012, other states may take action against UK flag vessels now, once it is understood that our provisions could apply to their nationals and/or on ships flagged to their state. Accordingly, as stated, we plan to introduce powers which will enable us to apply the relevant provisions of the Bill to appropriate categories of seafarers and offshore workers after careful consideration and in full knowledge of the effects that might have.
	Amendments Nos. 136B and 136C to Clause 115 and Amendments Nos. 139ZA and 139ZB to Clause 116 are all consequential amendments that ensure that the procedures for making the Order in Council provisions for persons in offshore employment are contained within the new clausethat is, as proposed in Amendment No. 118ZG. These amendments also clarify that Clauses 115 and 116 continue to apply just to regulations and orders made by the Secretary of State. Part of Amendment No. 138A inserts a list of clause references that will fall within the affirmative resolution as set out in Clause 115(4). Amendment No. 118ZA relating to persons working on vessels falls within this. Amendments Nos. 142A and 142B are consequential amendments to ensure that these regulations can extend to Northern Ireland.

Lord Skelmersdale: I remember that, some 20 years ago, when I was standing where the noble Lord, Lord McKenzie, is now standing, I struggled, manfully, I hope, with the particular and peculiar place of share fishermen in social security legislation. It was a nightmare then, and it is a nightmare now. I am delighted that the Minister has seen fit to remove them from the Bill.
	It seems to me that persons working on vessels should be treated in exactly the same way as any other persons working on vessels, and I quite understand why Clause 84 eliminates share fishermen from the Bill. Amendment No. 118ZE widens ship workers from simply meaning share fisherman to any individual who works on a ship. I have no objection to that in principle, but is it not just a tiny bit vague? Is the new clause intended to cover seagoing personnel only? If so, it does not specifically say so. Of course, other people work on ships, even though they are shore-based. The obvious examples are cargo handlers and pilots, whose sole rationale is working on and around ships, although the first do some work on land. I am sure that the Government do not want to exempt them from auto-enrolment, and I hope that the new clause does not do so inadvertently.
	It is of particular note that people working on oil rigs under the second new clause in Amendment No. 118ZG are subject, quite rightly, to auto-enrolment. Incidentally, that amendment is identical, as far as I can see, to Amendment No. 118ZF, which has been withdrawn. What is the point of that? Is it to confuse the Committee even more?
	I am not sure why Amendment No. 136B is grouped, or why we have it at all. Can the Minister tell us which powers to make orders in the Bill are not conferred on the Secretary of State? Amendments Nos. 136B and 136C, 139ZA and 139B all cover order-making powers and have nothing, as far as I can see, in common with the two substantive amendments in this overly large group. Amendments Nos. 118ZE and 118ZG are, as I said, about ship and oil-rig workers. The only connection between the first set of amendments that I mentioned and them is that they contain order-making powers, but so do several other clauses.

Lord McKenzie of Luton: Let me start with share fishermen. The position is that, under the Bill as drafted with Clause 84, they are not treated as workers. We seek to remove Clause 84, but they will be brought back in because they are people who are working on ships, so they will be part of the consultation that needs to be undertaken. The noble Lord is right to say that the provision is not very precise about who is included and who is not. That is because it is a highly complex situation.
	In moving the Motion, I described the situation where you have a non-UK resident working on an overseas vessel that happens into our waters on a journey somewhere else. Currently, because they could be treated as workers carrying out work within Great Britain, they could technically be within the scheme; that would not make sense. Equally, as I pointed out, they could be UK residents on UK-flagged vessels operational outside of UK waters. In principle, we expect those people to be included. There are complexities and a lot of work has to be done to consult with industry, trade unions and others to ensure that we set the guidelines appropriately. That is why the provisions are framed on this basis.
	The noble Lord asked about Amendment No. 136B. We want here to separate the provisions under which Orders in Council are the route to making regulations. As the noble Lord will be aware from his time in Northern Ireland, issues dealing with territorial matters are dealt with by Orders in Council rather than by the Secretary of State. On dock workers, the understanding is that they would be covered as land-based workers, but if individuals were in categories where it was not clear, the consultation that we would undertake would, we hope, identify them and enable the regulations to cover them.
	That is why this rather large group of amendments is constructed as it is, as an attempt to make sure that we can be more precise about who should be in and who should be out of auto-enrolment duties.

Lord Skelmersdale: Will the consultation be finished by Third Reading, which presumably will be at some time before 3 December, because it may well be that the clause needs to be looked at quite critically again? I am not saying that it will, but the noble Lord will have noted that I have various questions about it; whether it is right or wrong I do not know, but I do not want it to be wrong.

Lord McKenzie of Luton: I do not have a timeline for when the consultation would be finished, but the process that will be undertaken as a result of these clauses may well not be completed by Report. I am happy to arrange for a briefing for the noble Lord on the specifics of these provisions, if that would help.
	To add to what I have just said, we do not think that this will be ready before Third Reading. We hope to be able to open early discussions with stakeholders later this year to consider who may or may not be included in these provisions. As I have already indicated, this is a complex and difficult area and we need to progress with caution and sensitivity.

Lord Skelmersdale: Will the Minister confirm that that means that if the clause remains in the Bill and is established and slightly erroneous, it can subsequently be altered by order? It needs to be altered in some way, does it not?

Lord McKenzie of Luton: The import of these clauses is a regulation-making power to ensure that, through the necessary discussion with stakeholders, we can identify for the purposes of the legislation people whom we believe should be in the legislation and people who should be outside it. The clauses stand as they are because they give the power to do that. We then need discussions with stakeholders so that we can work under the clauses to produce the outcome that we believe is appropriate. Again, if it is helpful, we can get officials to run through this in more detail with the noble Lord.

Clause 84 negatived.

Lord McKenzie of Luton: moved Amendment No. 118ZE:
	After Clause 84, insert the following new Clause
	Persons working on vessels
	(1) Subject to regulations under this section, a person employed or engaged in any capacity on board a ship is not, by virtue of that employment or engagement, a worker for the purposes of this Part.
	(2) The Secretary of State may by regulations provide that, to the extent and for the purposes specified in the regulations, the relevant provisions apply, with or without modification, in relation to a person employed or engaged in any capacity on board a ship (whether or not that person is working or ordinarily works in any part of the United Kingdom).
	(3) For the purposes of this section, the relevant provisions are
	(a) this Part (and any enactment as amended by this Part), and(b) any provision in force in Northern Ireland corresponding to any provision of this Part (and any enactment as amended by such a provision).
	(4) Regulations under this section
	(a) may provide for a provision to apply in relation to individuals whether or not they are British subjects;(b) may provide for a provision to apply in relation to bodies corporate whether or not they are incorporated under the law of a part of the United Kingdom;(c) may do so even where the application may affect the individual's or body's activities outside the United Kingdom.
	(5) Regulations under this section
	(a) may provide for a court or tribunal on which jurisdiction is conferred by the relevant provisions to have jurisdiction, in respect of offences or other matters, for the purposes of any provision as it applies by virtue of the regulations;(b) may exclude from the operation of section 3 of the Territorial Waters Jurisdiction Act 1878 (c. 73) (consents required for prosecutions) proceedings for offences under any provision as it applies by virtue of the regulations;(c) may provide that such proceedings may not be brought without such consent as may be required by the regulations.
	(6) Any jurisdiction conferred on a court or tribunal under this section is without prejudice to jurisdiction exercisable apart from this section by that or any other court or tribunal.
	(7) In this section, ship includes
	(a) a hovercraft within the meaning of the Hovercraft Act 1968 (c. 59), and(b) every description of vessel used in navigation.
	On Question, amendment agreed to.
	[Amendment No. 118ZF had been withdrawn from the Marshalled List.]

Lord McKenzie of Luton: moved Amendment No. 118ZG:
	After Clause 84, insert the following new Clause
	Persons in offshore employment
	(1) Her Majesty may by Order in Council provide that, to the extent and for the purposes specified in the Order, the relevant provisions apply, with or without modification, in relation to a person in offshore employment.
	(2) For the purposes of this section, the relevant provisions are
	(a) this Part (and any enactment as amended by this Part), and(b) any provision in force in Northern Ireland corresponding to any provision of this Part (and any enactment as amended by such a provision).
	(3) In this section, offshore employment has the same meaning as in section 201(1) of the Employment Rights Act 1996 (c.18).
	(4) An Order in Council under this section
	(a) may provide for a provision to apply in relation to individuals whether or not they are British subjects;(b) may provide for a provision to apply in relation to bodies corporate whether or not they are incorporated under the law of a part of the United Kingdom;(c) may do so even where the application may affect the individual's or body's activities outside the United Kingdom.
	(5) An Order in Council under this section
	(a) may make different provision for different cases;(b) may provide for a court or tribunal on which jurisdiction is conferred by the relevant provisions to have jurisdiction, in respect of offences or other matters, for the purposes of any provision as it applies by virtue of the Order;(c) may (without prejudice to subsection (1) and paragraph (a)) provide for a provision to apply in relation to any person in employment in a part of the areas referred to in section 201(1)(a) and (b) of the Employment Rights Act 1996 (c.18);(d) may exclude from the operation of section 3 of the Territorial Waters Jurisdiction Act 1878 (c.73) (consents required for prosecutions) proceedings for offences under any provision as it applies by virtue of the Order;(e) may provide that such proceedings may not be brought without such consent as may be required by the Order.
	(6) Any jurisdiction conferred on a court or tribunal under this section is without prejudice to jurisdiction exercisable apart from this section by that or any other court or tribunal.
	(7) No Order in Council may be made under this section unless a draft of the Order has been laid before and approved by a resolution of each House of Parliament.
	On Question, amendment agreed to.
	Clause 85 agreed to.
	Clause 86 [Interpretation of Part]:

Lord McKenzie of Luton: moved Amendments Nos. 118A to 121:
	Clause 86, page 41, line 39, after between insert the provider of
	Clause 86, page 42, line 12, leave out employee
	Clause 86, page 42, line 12, after employment insert and related expressions
	Clause 86, page 42, leave out lines 16 to 19 and insert which is neither a defined benefits scheme nor a money purchase scheme;
	On Question, amendments agreed to.
	[Amendment No. 122 not moved.]

Lord McKenzie of Luton: moved Amendments Nos. 123 and 123A:
	Clause 86, page 42, line 42, at end insert
	provider
	(a) in relation to a personal pension scheme to which section 25 applies, means the person referred to in subsection (1)(b) of that section;(b) in relation to any other personal pension scheme, has the meaning prescribed;
	Clause 86, page 42, line 45, at end insert
	the Regulator means the Pensions Regulator;
	On Question, amendments agreed to.
	Clause 86, as amended, agreed to.
	Clauses 87 and 88 agreed to.

Baroness Noakes: moved Amendment No. 124:
	After Clause 88, insert the following new Clause
	Conditional indexed schemes
	(1) Schedule (Provision for conditionally indexed arrangements etc) which amends
	(a) section 84 and Schedule 3 to the Pension Schemes Act 1993 (c. 48) (basis of revaluation),(b) section 180 of the Pension Schemes Act 1993 (definition of normal pension age),(c) section 51 of the Pensions Act 1995 (c. 26) (annual increase in rate of pension),(d) section 67 of the Pensions Act 1995 (restriction on powers to alter schemes), and(e) Schedule 7 to the Pensions Act 2004 (c. 35) (pension compensation provisions),
	has effect.
	(2) The amendments made by Schedule 2A do not apply in relation to any scheme or arrangement which was in existence prior to the coming into force of this section.
	(3) In this section, conditional indexation relates to benefits provided by a conditionally indexed scheme.
	(4) For the purposes of this section and any regulations made under it, a conditionally indexed scheme is an occupational pension scheme within the meaning of section 1 of the Pension Schemes Act 1993 which
	(a) was established after the coming into force of this section,(b) is not a money purchase scheme as defined by section 181(1) of the Pension Schemes Act 1993,(c) provides that the future indexation of pensions both in deferment and in payment (at least the minimum rate required under section 84 of and Schedule 3 to the Pension Schemes Act 1993 or section 51 of the Pensions Act 1995, as relevant, as if those sections applied to conditionally indexed schemes) is funded in accordance with Part 3 of the Pensions Act 2004, but is not a liability of that scheme such as to create an accrued right or entitlement for or in respect of a member unless and until it is awarded by the trustees or managers in accordance with such terms and conditions as may be prescribed, (d) complies with methods and assumptions prescribed for the setting of normal pension age, and(e) complies with such other requirements as may be prescribed.

Baroness Noakes: I shall speak also to Amendment No. 130. These amendments provide for conditional indexation, and I am sure that noble Lords will be aware of this concept from the extensive briefing provided on it by the Association of Consulting Actuaries, which has been tirelessly developing it. The background to the amendments is the disastrous decline of private sector pension provision, and in particular private sector defined benefit pension provision. We could, as we have done in the past, spend several hours debating the causes of this decline, but I am going to exercise considerable self-restraint and confine myself to the fact of it. Let me remind the Committee that since 1995, the number of employee members of private sector defined benefit schemes open to new entrants has declined from 5 million to 900,000. The direction of travel is clear: it is not stable, as the Government sometimes like to suggest, but is still going down. Without action from the Government, we can expect to consign defined benefit provision in the private sector to the history books.
	The focus of the Bill is on bringing the majority of the workforce into employment-based pension provision, and the personal accounts scheme, which could well be the dominant scheme under auto-enrolment, will be a money purchase scheme. Even on the most favourable assumptions, an employee enrolled into the personal accounts scheme would be likely to have a pension in retirement that is less than that of an employee retiring in a defined benefits scheme. But this Bill does absolutely nothing to encourage private sector employers to continue with their defined benefit schemes, and certainly would not induce a single employer to consider starting one. These amendments are designed as a modest contribution to keeping defined benefit schemes in existence.
	Conditional indexation attacks one of the features of the rules for defined benefit schemes which apply in the UK, but practically nowhere else in the world. It is an absolute requirement in the UK that both deferred pensions and pensions in payment have to be uprated in line with inflation. If we look to international experience, some such as Ireland compulsorily index deferred pensions, and some such as Germany compulsorily index pensions in payment, but only the UK does both. This is one of the drivers of the cost problem with defined benefit schemes, and let there be no doubt that there is a cost problem for them in the UKask any finance director about that.
	Conditional indexation is based on the method of providing pensions in the Netherlands. It is a form of risk sharing, because while the employer is expected to fund the scheme to accommodate the indexation of benefits, the award of indexation would be conditional on the actual level of funding in the scheme. If there was a deficit in the scheme, the indexation would be forgone until there was a surplus, when the first call on that surplus would be the restoration of deferred or lost indexation rights. Employers with a defined benefit scheme often face a funding nightmare. They are struggling to fund ongoing pension accrual, which is tending to increase, as well as funding emerging deficits, which come inter alia from improving longevity. But indexation of benefits is also a major driver of the liabilities of defined pension schemes, and conditional indexation is one way of helping employers to not only control the costs overall but make them more stable and not subject to being ramped up as soon as deficits emerge.
	The version of conditional indexation pursued by the Association of Consulting Actuaries is based on career average earnings, which has a further advantage for employers of making the costs more predictable and hence manageable. Some may say that these would be unfair to employees, and certainly compared with existing DB schemes employees would bear some of the risk. But money purchase arrangements, which this Bill will enshrine as the standard form of private sector pension provision, do not share risk at allall of it is borne by the employee. Conditional indexation provides a middle way between the full rigours of a defined benefit provision as we currently define it in the UK and money purchase, but it is much closer to defined benefit provision in substance, and the employer in particular will still be expected to fund for indexation. Evidence from the Netherlands is that it does work. Where indexation has been passed for some years, it has generally been restored. It is not a charter for unscrupulous employers. Instead, it may encourage more employers to start defined benefit schemes or to keep existing ones going on a conditionally indexed basis.
	The possibilities offered by these amendments would be restricted to the future only, and would not affect accrued rights. Employee organisations that fear conditional indexation on the basis that it will become the norm for future benefit accrual really need to balance the possibility against the increasing likelihood that no form of deferred benefit accrual may be available in the future. Rather, I hope that employee organisations will see conditional indexation as a lifeline for the preservation, or possibly even the creation, of some form of defined benefit provision.
	The Lewin and Sweeney deregulatory review of private pensions last year floated a lot of ideas about flexibility but the Government did not do anything about it until they started a consultation last month. Those in the pensions industry to whom we have spoken do not expect the Government's consultation to produce any firm conclusions at an early stage. The Government say that they want to examine the scope for flexibility but there is no commitment in their document to delivering flexibility. Even if the Government decide eventually that they want to pursue flexibility, there is no certainty that any space will be found for a further pensions Bill in the next Sessionespecially as by the time this Bill is enacted there will have been three pensions Bills in five yearsand it would be a shame to lose the opportunity of this Bill.
	I understand that to legislate prospectively for a wider range of flexibility may require the creation of delegated legislation powers which go beyond even those which the Government are seeking in relation to the regulator's powers in Amendment No. 130EW, to which we will come in due course. We do not have the drafting resources available to us to draft flexibility amendments ourselves, but if the Government were minded to go down that route to create a platform for flexibility going forward, we would be prepared to work with them to allow flexible schemes to emerge.
	But, if we cannot achieve full flexibility powers in the Bill, it would not be right to let this opportunity pass without including the solution that the Association of Consulting Actuaries has put so much time and effort into. The amendments in this group have, to use the words of the editor of the Evening Standard, been,
	tested ... almost to destruction in two years of debate and consultation within the pensions industry.
	They allow only new schemes to use conditional indexation and represent a workable and practical solution going forward.
	The CBI supports the amendments. Employers may not be queuing up for the opportunity to introduce conditional indexation, but if it is available and if it saves or creates only one defined benefit scheme, surely it would be worth it. We have learnt throughout the Committee that the Minister favours flexibility. I hope that he is in a mood to put that flexibility to good use on these amendments. I beg to move.

Baroness Hollis of Heigham: Conditional indexation as proposed by the Association of Consulting Actuaries is an interesting idea. I have been proposing over many years that there is a need to develop more hybrid schemes to share risk because clearly the bifurcation between DB schemes on the one hand and DC schemes on the other is absurd. Organisations such as Barclays, for example, have been looking at not only career averages but accruals at one-hundredth underpinned by a money purchase element.
	However, the problem has been that almost every company that has gone down this routeI am aware of only half a dozen or so major hybrid schemes which appear to share riskhas developed its own scheme; there is no common platform. As a result, to take one issue in particular, there is no way of knowing what element of a hybrid scheme is protected by the PPF because it is DB, and what is not protected because it is money purchase. I was hoping that the consultant actuaries would develop two or, at most, three common templates of hybrid schemes which could then be adopted by organisations and companies for the future to risk share. In that sense we are all in the same field. We want to reduce laying onto the employee the total risk of DC schemes but accept the need to give some security to the employer for future capping of costs in a fairly uncertain world. We all share that.
	On conditional indexation, however, I wonder whether the noble Baroness can help me. I thought she suggested that accrued rights would be protected, but that an existing employer within an existing DB scheme could switch future accrual of rights for existing members of existing schemes to the new conditional indexation basis. She is nodding. If so, why would not every employer go down that route? For every DB scheme that might be saved from going over to DC, would not 99 other DB schemes worsen the rate of return, which they would not have done otherwise, for their existing members? In other words, can she persuade me that this will not result in a general levelling down that would not have occurred but for this option?
	I absolutely accept and respect the fact that this may save the closure of some DB schemes that would have become DC for new members though not necessarily for existing members. But how would the noble Baroness protect members of existing DB schemes from being moved on to conditional indexation at a time when indexation, after a long period of stable inflation rates under this Government, may begin to move as the current recession sweeps in from the United States? That may produce a more volatile environment, causing a greater wish among financial directors to go down that path and a greater exposure to risk for the members.
	In a way, I am asking the noble Baroness whether she has any counterfactual evidence. I can see that this may prevent the closure of some DB schemes, but at what cost to members of existing DB schemes who will almost certainly, across the board, see their returns reduced?

Lord Kirkwood of Kirkhope: I support the amendments, although we will need to ask some technical questions. I have two simple points to add.
	I concur with the comments of the noble Baroness, Lady Noakes: there is not enough urgency about the extent of the problem. The noble Baroness, Lady Hollis, says that this might encourage more DB schemes to level down, but a great amount of DB erosion is occurring at the moment. Evidence was produced earlier in the Committee stage which included the PricewaterhouseCoopers survey Does the Exodus Signify Genesis?.The Minister is right that it is a small sample of big companies. However, it shows not only that the schemes are being closed to new members, but that accrual rates are being dramatically affected. The Office for National Statistics survey published on 2 July 2008 confirmed that erosion. The starkest statistic in that report was that, in the three years since 2004, mostly because of defined benefit scheme closures, the number of active members of any private sector pension scheme has reduced by 25 per cent to 3.6 million members.
	That is happening in real time. It is happening now and in a very big way. Are the Government really sure that they are on top of it? Do they have a handle on the extent to which the erosion is happening in front of their eyes? The economic circumstances will not get better any time soon, and that will make the situation worse. The noble Baroness, Lady Noakes, is absolutely right that an enormous transfer of risk is taking place. This proposal is a halfway house and a statable and arguable case has been made.
	The noble Baroness, Lady Noakes, is right that we could talk about this for an awful long time, but at 6.55 pm on a Thursday I do not think that that would be the right thing to do. However, what harm can the proposal do? The noble Baroness, Lady Hollis, says that it might increase the temptation to tip some people in that direction. Apart from thatit is an important point which I have not heard before; I will have to think about itwhat possible harm or difficulties could be caused by allowing this flexibility? And it is flexibility. I think most employers out there want to help as best they can. This device has been worked on by the ACA, as has been stated, for many years. They are serious people who know what they are doing. For the life of me, I cannot see what harm this would do. Statistics and fine debating points aside, are the Government really on top of the extent of the erosion? What harm could this set of amendments, properly drafted and put into the Bill, possibly do?

Baroness Hollis of Heigham: The noble Lord would be the first to accept that if you go for a level annuity, as opposed to an index-linked annuity, you have your money up front from that same potbut over the course of 10 or 12 years with 5 per cent inflation, it will probably halve in value. As I understand the consultant actuaries' report, what is happening with conditional indexation is that companies would index only where they felt they could afford to do so, given the state of the deficit or surplus in the fund. That would mean that unless the fund were adequately fundedit may partly be a matter for the regulatory regime to ensure that that is sothe value of the pension would be eroded for many years because it was not indexed. I am perfectly willing to be persuaded that that is still preferable to a DC scheme without any indexation at all because people object to the level of annuity, but that is the risk. Although that reduces the cost for the employer, it means that the employee is effectively taking on the vast bulk of the risk of inflation over a period when they are also carrying increased longevity. That may be a risk worth taking, but that is surely where it lies.

Lord McKenzie of Luton: The Government have said that we are interested in the concept of risk-sharing, which is why we recently issued a consultation paper on that very topic. That paper has been welcomed in many quarters as a step in the right direction. To be clear: the consultation paper we published on 5 June is very wide-ranging; it does not set out a government policy position but seeks views on a number of different proposals.
	On the question of whether the Government are concerned about the decline in private sector defined-benefit provision, there are a variety of estimates of the number of active members in such schemes, but we are not under any illusion that there are serious issues around the decline of defined-benefit provision, which is why we launched a deregulatory review and why we are interested in risk-sharing.
	The consultation paper includes material on risk-sharing within the current regulatory framework, including what changes employers are making to their schemes currently, what is possible and why only a few employers are taking advantage of these options. It also outlines proposals for risk-sharing put forward by stakeholders that include conditional indexation but also collective defined-contribution schemes.
	The noble Baroness's amendments seek to modify the application of existing legislation for new schemes that provide conditional indexation. However, it is important to remember that conditional indexation schemes are just one form of risk-sharing, as we set out in the consultation document; I have just mentioned collective defined-contribution schemes, and conditional indexation itself can be based on a career-average approach or it can be included for all schemes, including final salary arrangements.
	We need to bear in mind that risk-sharing could have far-reaching consequences for schemes and their members. Making conditional indexation possible would be a significant move away from the current requirements and would remove a valuable protection for members. Given that targeted indexation would not in itself deliver any immediate savings for employers, we need to find out how much real appetite there would be for such a change. Our consultation paper asks for views on whether greater flexibility in the way employers and employees share pension risks would encourage employers to provide good workplace pensions. We also want to find out whether employers who provide defined-benefit pensions today would adopt the conditional indexation or collective defined-contribution approach as a middle ground for continuing to provide some sort of defined-benefit provision.
	We do not want to introduce legislative changes that would introduce another layer of legislative complexity if those changes would not be of sufficient benefit to warrant it. That is why we want to hear from employers and others about the likely impact of different risk-sharing approaches. This is an important issue and we do not want to rush into legislating for one form of risk-sharing until we have had the opportunity to consider responses to the consultation. We need to hear views about, and gauge the level of interest in, the other forms of risk-sharing outlined in the paper.
	I assure Members of the Committee that we want all types of good employer pension provision to continue and we will explore all means of achieving that. Changing the law to encourage the development of more innovative approaches to risk-sharing may be the way forward, but we want to hear from employers and other stakeholders before we consider what changes, if any, need to be made. We understand concerns that urgent action is needed to slow down the closure of good pension provision, but legislating at this stage for just one particular form of risk-sharing would be premature and could even accelerate closures.
	There was one issue that arose regarding the Netherlands and the impact that this can have. I do not want to dwell upon the technicalities of the proposal, but we know from the Dutch experience that where indexation is withheld but subsequently restored, there is an issue regarding fair treatment between those accruing rights or with deferred rights and those already drawing their pension. This is not least because pensioners feel the loss of indexation immediately in their pocket.
	We should also bear it in mind that on a recent visit to the Netherlands, a DWP official was told by the Dutch Government and industry representatives that the intricacy of the new conditional indexation system means that schemes are understood by fewer members than ever before. One of our aims throughout this programme of reform has been to encourage people to take personal responsibility for saving for retirement, and adding complexity to the occupational pensions landscape would not sit well with this aim. If they are to take personal responsibility, it is important that people understand the scheme in which they are saving.
	I reiterate that we are interested in risk-sharing. We expect to publish the response to the consultation in the autumn, and I will keep the House updated on progress in the mean time. Until we have gone through that detailed consultation, we believe it would be premature to rush into legislation, particularly given that there are fairly broad powers and no great detail about what may be prescribed. Given that there is not just one model of risk-sharing, we need to evaluate them all. However, it is an important issue.

Baroness Noakes: I thank the Minister for that reply. Given the time, I will not prolong the debate too much. The noble Baroness, Lady Hollis, asked for an assurance that there would be no levelling down. She knows that I cannot do that, but she should be under no illusionsdefined benefit schemes are going in one direction only, and that is closure. This proposal has been developed as a way of mitigating the impact of closure. I cannot say how many defined benefit schemes would be converted into conditional indexed schemes; I cannot say that it would even stop any vestige of defined benefit remaining. It is just one way of seeing whether we can stop what appears to be an irreversible trend. Even the Pensions Minister, Mr Mike O'Brien, in an interview with the Daily Telegraph earlier this week or late last week, effectively accepted that defined benefit schemes are going in that direction. It is the first time we have heard a Minister say that.
	There are clearly concerns that if employers switched on a future basis to conditional indexed schemes, employees would get less than they would under existing defined benefit schemes, but they may just be switched into money purchase schemes. That is the alternative and we have to weigh it up.
	I was grateful for the support of the noble Lord, Lord Kirkwood. I agree with him that there does not appear to be enough urgency about this issue. I am afraid to say that while I am grateful for what the Minister said, he rather underlined that. People on the street say that the DWP is not committed to flexibility and that in many ways it is not committed to stopping the rot on defined benefit, because all the attention is now focused on setting up auto-enrolment and money purchase-type arrangements. The Minister shakes his head, but that is what people say. It is perhaps an unfortunate impression, but it exists, because it took a long time for the DWP to produce its document.

Lord McKenzie of Luton: Who is saying that? Who are these people? Which streets is the noble Baroness travelling?

Baroness Noakes: The Minister would not expect me to name names because all the people concerned need to deal with the DWP. Therefore, I will not reveal who says what about it. However, it is a fact that it took a long time from the deregulatory review even to put out a consultation document. The document was carefully timed to avoid anything being done in this Bill.
	I accept that more work may need to be done on the amendment, but, as I was trying to point out in my opening remarks, it would at least be something that is available to employers to stop them having a simple decision to make: money purchase or carry on with a defined benefit scheme whose cost they cannot bear. I hope that the Minister and his colleagues will reflect on that again during the summer, because it would be a shame to lose the opportunity afforded by the Bill to create something to help defined benefit schemes stay in existence in some form. The Association of Consulting Actuaries remains fully committed to working with the Government if they would like to perfect an amendment that satisfied them. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 125 had been withdrawn from the Marshalled List.]

Lord Tunnicliffe: I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.
	House resumed.
	House adjourned at 7.07 pm.